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91–193 PDF 2014

S. HRG. 113–466 

DRIVERS OF JOB CREATION 

HEARING 

BEFORE THE

SUBCOMMITTEE ON 

ECONOMIC POLICY 

OF THE

COMMITTEE ON 

BANKING, HOUSING, AND URBAN AFFAIRS 

UNITED STATES SENATE 

ONE HUNDRED THIRTEENTH CONGRESS 

SECOND SESSION 

ON 

EXAMINING THE CURRENT STATE OF JOB CREATION FOCUSING ON 

KEY SECTORS SPURRING JOB GROWTH AS WELL AS THE IMPORTANT 

ROLE OF THE MIDDLE CLASS 

MAY 7, 2014 

Printed for the use of the Committee on Banking, Housing, and Urban Affairs 

( 

Available at: http://www.fdsys.gov/ 

COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS 

TIM JOHNSON, South Dakota, Chairman 

JACK REED, Rhode Island 

CHARLES E. SCHUMER, New York 

ROBERT MENENDEZ, New Jersey 

SHERROD BROWN, Ohio 

JON TESTER, Montana 

MARK R. WARNER, Virginia 

JEFF MERKLEY, Oregon 

KAY HAGAN, North Carolina 

JOE MANCHIN III, West Virginia 

ELIZABETH WARREN, Massachusetts 

HEIDI HEITKAMP, North Dakota 

MIKE CRAPO, Idaho 

RICHARD C. SHELBY, Alabama 

BOB CORKER, Tennessee 

DAVID VITTER, Louisiana 

MIKE JOHANNS, Nebraska 

PATRICK J. TOOMEY, Pennsylvania 

MARK KIRK, Illinois 

JERRY MORAN, Kansas 

TOM COBURN, Oklahoma 

DEAN HELLER, Nevada 

CHARLES YI, Staff Director 

GREGG RICHARD, Republican Staff Director 

DAWN RATLIFF, Chief Clerk 

TAYLOR REED, Hearing Clerk 

SHELVIN SIMMONS, IT Director 

JIM CROWELL, Editor 

SUBCOMMITTEE ON ECONOMIC POLICY

JEFF MERKLEY, Oregon, Chairman 

DEAN HELLER, Nevada, Ranking Republican Member 

JOHN TESTER, Montana 

MARK R. WARNER, Virginia 

KAY HAGAN, North Carolina 

JOE MANCHIN III, West Virginia 

HEIDI HEITKAMP, North Dakota 

TOM COBURN, Oklahoma 

DAVID VITTER, Louisiana 

MIKE JOHANNS, Nebraska 

MIKE CRAPO, Idaho 

ANDREW GREEN, Subcommittee Staff Director 

SCOTT RIPLINGER, Republican Subcommittee Staff Director 

(II)

C O N T E N T S 

WEDNESDAY, MAY 7, 2014 

Page 

Opening statement of Chairman Merkley ............................................................. 1 

Opening statements, comments, or prepared statements of: 

Senator Heller ................................................................................................... 2 

WITNESSES 

Jennifer Erickson, Director of Competitiveness and Economic Growth, Center 

for American Progress ......................................................................................... 3 

Prepared statement .......................................................................................... 27 

Derek Smith, Chief Executive Officer, Clean Energy Works Oregon ................. 5 

Prepared statement .......................................................................................... 33 

Emil H. Frankel, Visiting Scholar, Bipartisan Policy Center .............................. 7 

Prepared statement .......................................................................................... 35 

Robert Dietz, Vice President for Tax and Market Analysis, National Association of Home Builders .......................................................................................... 8 

Prepared statement .......................................................................................... 38 

R. Thomas Buffenbarger, International President, International Association 

of Machinists and Aerospace Workers ............................................................... 10 

Prepared statement .......................................................................................... 51 

(III)

(1) 

DRIVERS OF JOB CREATION 

WEDNESDAY, MAY 7, 2013 

U.S. SENATE, SUBCOMMITTEE ON ECONOMIC POLICY, COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS, Washington, DC. 

The Subcommittee met at 2:32 p.m., in room SD–538, Dirksen 

Senate Office Building, Hon. Jeff Merkley, Chairman of the Subcommittee, presiding. 

OPENING STATEMENT OF CHAIRMAN JEFF MERKLEY 

Chairman MERKLEY. I call this hearing of the Economic Policy 

Subcommittee of the Committee on Banking, Housing, and Urban 

Affairs to order. 

Five and a half years ago, this country faced the largest financial 

crisis since the Great Depression. This crisis and the following recession shook the American job market to its core. We have made 

progress over the last several years in recovering jobs and growth, 

with employment recently surpassing pre-recession levels for the 

first time. 

At the same time, though, there is no doubt that much more 

needs to be done and should be done to drive job creation, particularly middle-income, good-paying jobs with benefits—a foundation 

for America’s economic success. 

We still have much more to do to make an improving but still 

tough economy work for all Americans. Unemployment rates remain high and punishingly long for too many. The recent lapse in 

emergency unemployment insurance has led many long-term job 

seekers to exit the workforce. And while payroll employment gains 

have recently been rising at a pace of about 200,000 per month and 

almost 300,000 last month, we need more jobs for new entrants 

and more jobs for those seeking full-time employment. 

Among the hardest-hit sectors have been construction and manufacturing. As policy makers, we should above all keep in mind that 

not all jobs are created equal. One of the most troubling trends of 

the Great Recession has been that middle-income jobs lost in the 

recession have been replaced in the recovery by low-wage jobs. An 

updated study released last week by the National Employment 

Law Project shows that this trend continues. We should focus most 

on the creation of good middle-class jobs with living wages which 

will serve as a multiplier driving the economy forward. 

I know that these types of jobs are good for working families and 

good for the economy, because I grew up in a blue-collar family 

2 

that was able to live the middle-class American dream. As I have 

said before, America does well when the middle class does well. 

We have with us today a panel of experts who will discuss the 

state of the labor market as a whole and describe the roles of some 

key sectors in creating living-wage jobs. So I thank all of you. We 

will have an opening statement from our Ranking Member, Senator 

Heller, and then we will turn to your testimony. It is great to have 

you here. 

STATEMENT OF SENATOR DEAN HELLER 

Senator HELLER. Mr. Chairman, thank you for holding this hearing, and it is always timely to talk about jobs. I want to thank our 

witnesses also for taking time and being here with us today. 

Creating jobs and fixing this broken economy has always been 

my highest priority, as I know it has been for the Chairman. And 

there is not a day that goes by that I do not think about what can 

be done to create jobs and improve our economy. 

It has almost been a year since we had our first Subcommittee 

hearing on how to help the middle class in this recession. Unfortunately, after a year, it is clear that 

Washington, DC, is still failing to create an environment where 

private businesses are able to create robust job growth. Some 

would argue that Washington, DC, has been forcing a job destroying agenda on the American public. 

I believe that the policies of the last couple years are not working 

in Nevada. Nevadans suffered through 41⁄2 years of double-digit unemployment and is still one of the worst rates in our country. We 

have to end the fear and uncertainty that most Nevadans are facing. 

Now is the time when we should develop policies that would create new growth and opportunities and finally free ourselves from 

this mediocre and stagnant economy. 

Well, there is a lot of talk about how to create jobs. There has 

been a lack of action to help create jobs. There are concrete measures that Congress could be doing right now that would create jobs. 

Let us reform the Tax Code. Let us rein in wasteful Federal spending. Let us support comprehensive energy policies. And let us stop 

Washington’s overregulation. 

As I mentioned in our hearing last year, Nevadans are fighting 

every day for a decent paycheck, a safe home, and a strong community. Their driving goals for a better life is what motivates me 

every day to fight for them here in Washington so their voices can 

be heard. 

I want to thank again all of our witnesses for taking the time 

to be here today. I look forward to your testimony, and thank you, 

Mr. Chairman, again for this hearing. 

Chairman MERKLEY. You are welcome, and I will go ahead and 

introduce all of our witnesses, and then we will enter directly into 

the testimony. 

Jennifer Erickson is the Director of Competitiveness and Economic Growth at the Center for American Progress. She holds a 

B.A. from the University of Virginia, a master’s in public policy 

from the University of Edinburgh. Her work focuses on a range of 

issues affecting America’s ability to compete successfully at home 

3 

and internationally. Prior to joining the Center for American 

Progress, Ms. Erickson served as special advisor to the First Minister of Scotland, with portfolios including economic growth, innovation, and U.S. relations. 

Mr. Derek Smith comes from Portland. I am so glad that you 

traveled so far to join us. He has been a leader in the role in triple 

bottom line ventures for more than a decade with experiences in 

the public, private, and nonprofit sectors. Prior to heading Clean 

Energy Works Oregon, he was policy advisor for the city of Portland’s Bureau of Planning and Sustainability. In the late 1990s, 

Derek developed one of the first sustainability programs in the retail world at Norm Thompson Outfitters. As Director of Operations 

at YOLO Colorhouse, Derek was a member of the management 

team that achieved 500 percent annual growth. He has a B.S. in 

Mass Communications from San Jose State University and an 

M.B.A. from the University of Oregon. 

Emil Frankel is a visiting scholar at the Bipartisan Policy Center 

and an independent consultant on transportation policy and public 

management issues. Previously, he served as BPC’s Director of 

Transportation Policy. He received his bachelor’s degree from Wesleyan University and his law degree from Harvard Law School. Mr. 

Frankel has a varied and distinguished career in both the public 

and private sector, including serving as Assistant Secretary of 

Transportation, Commissioner of the Connecticut Department of 

Transportation, and principal consultant at an international engineering consulting firm. 

Dr. Robert Dietz is Vice President for Tax and Market Analysis 

for the National Association of Home Builders. His responsibilities 

include economic and legal analysis of tax and policy issues. Prior 

to joining the National Association of Home Builders in 2005, Dr. 

Dietz worked as an economist for the Congressional Joint Committee on Taxation, specializing in revenue estimation of legislative 

proposals involving housing, urban development, and other business tax issues. He earned his Ph.D. in economics from Ohio State 

University. 

Mr. Tom Buffenbarger is the president of the International Association of Machinists and Aerospace Workers. He assumed his first 

IAM leadership post at age 20 in 1970 when he was elected shop 

steward of his apprenticeship group at General Electric Jet Engines. He has served in a number of key leadership roles over these 

years before becoming international president in 1997. And I might 

add that my father was a member of the Machinists, and so I certainly grew up so much appreciating the union. Thank you. 

And to kick us off, Ms. Jennifer Erickson. 

STATEMENT OF JENNIFER ERICKSON, DIRECTOR OF COMPETITIVENESS AND ECONOMIC GROWTH, CENTER FOR 

AMERICAN PROGRESS 

Ms. ERICKSON. Thank you, Chairman Merkley and Ranking 

Member Heller, for inviting me here to testify. My name is Jennifer 

Erickson, and I am the director of competitiveness and economic 

growth at the Center for American Progress. 

My testimony today will focus on three things: the current jobs 

picture in the United States, policies that can promote jobs over 

4 

the short term, and what we have to do over the longer term to 

have a dynamic economy. And what is central to all of this analysis 

is the understanding that if we are going to have a strong and 

growing economy, we need a strong and growing middle class—a 

middle class which provides a stable source of demand and also a 

pipeline of entrepreneurs and skilled workers. 

Between 2007 and 2009, the United States underwent its longest, most severe economic contraction since the Great Depression, 

with unemployment rising to 10 percent. In the nearly 5 years 

since the official end of the recession, the economy has continued 

to recover. As of last week’s latest jobs numbers, we have seen 50 

straight months of private sector job growth and added a total of 

9.2 million private sector jobs. 

And while that is encouraging, there can still be no doubt unemployment is stubbornly high unemployment and labor force participation is far too low. 

Much of this problem has to do with a lack of aggregate demand, 

an output gap which can be attributed in part to stagnant family 

incomes as well as fiscal austerity. So with 10 million workers still 

unemployed, the message could not be clearer. We need to take immediate steps for job creation. 

Now, if we are going to grow the largest, most dynamic, complex 

economy the world has ever seen, we have to do a lot of things 

right. But there are two things we can do right away: invest in infrastructure and dramatically expand apprenticeships. 

At a time when almost 800,000 construction workers are out 

looking for work and when so much of America’s infrastructure is 

in disrepair, this is the perfect time to invest. And we can do so 

knowing that for every $1 billion invested in infrastructure, between 9,000 and 15,000 direct and indirect jobs are supported. 

When it comes to our younger workers, we should remember that 

right now in the United States we have as many unemployed and 

underemployed workers as the entire population of New York City. 

And expanding apprenticeships is one way to address a part of that 

problem. Apprenticeships are a form of on-the-job training where 

workers are still earning a wage, and that training and those jobs 

will lead to good middle-class jobs. 

And when it comes to the longer term, we know that investments 

in our middle class and in our competitiveness helped build our 

economy in the 20th century. So the question is: Are we prepared 

to invest in ourselves once again? 

When it comes to building human capital, will we make sure that 

every child in America has the opportunity to attend high-quality 

preschool education where we know there is an enormous return on 

investment? And when it comes to our economic environment, since 

we know that about half of all economic growth following World 

War II came from advances in science and technology, then are we 

prepared to boost investments in general science, space, and technology funding, a category where we saw a cut in real terms of 12 

percent from 2010 to 2013? 

In fact, if we look at those 3 years, 2010 to 2013, we saw the 

largest 3-year reduction in Federal spending since demobilization 

following the Korean War. And cutting investments in our economic competitiveness at a time when the world is getting increasVerDate Nov 24 2008 11:14 Dec 19, 2014 Jkt 046629 PO 00000 Frm 00008 Fmt 6633 Sfmt 6633 L:\HEARINGS 2014\05-07 DRIVERS OF JOB CREATION\HEARING\50714.TXT JASON
5 

ingly global is incredibly shortsighted and it risks the very innovation economy that our workers and businesses have so diligently 

built. 

Finally, I would note that we have to take great care to avoid the 

mistakes of the past. Americans lost millions of jobs and trillions 

of dollars from the financial crisis that led to the Great Recession. 

So as a start, we must see through the landmark reforms from 

Dodd-Frank to ensure that the era of ‘‘too big to fail’’ has truly 

passed, enabling regulators with the tools they need to protect 

American jobs. 

We know how the economy works: Securing America’s middle 

class is the key to America’s economic growth in both the short and 

long term. So the sooner that we acknowledge that smart investments in growing that middle class are key to our economic success, the sooner we will see more Americans in good-paying jobs. 

Thank you. 

Chairman MERKLEY. Thank you. 

Senator, I know that you have to go. Do you want to ask any 

question before you go, just slip one in before you take off? 

Senator HELLER. I just want to apologize. Ms. Erickson talked 

about infrastructure and creation of jobs. I have got a Commerce 

hearing right now, and the Department of Transportation is going 

to be in front of that Committee, and we need some infrastructure 

work in Nevada. So I do apologize to all the witnesses. I really 

need to get to this Committee. But thank you very much for being 

here. 

Again, Mr. Chairman, thanks for holding this hearing. 

Chairman MERKLEY. You are off to apply the very insights that 

are being presented. Thank you so much. 

Mr. Smith. 

STATEMENT OF DEREK SMITH, CHIEF EXECUTIVE OFFICER, 

CLEAN ENERGY WORKS OREGON 

Mr. SMITH. Mr. Chair, my name is Derek Smith. I am CEO of 

Clean Energy Works, based in Portland, Oregon. Thank you for the 

opportunity to speak with you this afternoon, and thank you for 

your leadership on clean energy and economic development. 

Clean Energy Works is a nonprofit, public–private partnership. 

Our mission is to create jobs and reduce energy waste through the 

facilitation of home energy retrofits. We coordinate and deploy public, private, and utility dollars to scale up the residential energy efficiency sector. 

We were founded 4 years ago as a city of Portland pilot project 

seeded with Recovery Act dollars, and I am here to report that this 

smart Federal investment is proving that residential energy efficiency can create quality jobs and unlock private capital to grow a 

vibrant marketplace. 

To date, our statistics include: 

12,000 Oregonians signing up, 3,700 homes upgraded in rural, 

suburban, and urban communities; 30 percent average energy savings per home; and more than $1.5 million put back into the pocketbooks of Americans instead of being spent on energy waste. 

As for jobs, we know through our work that, for every 10 homes 

upgraded, one job gets created. To date, we have enabled 1,300 

6 

workers to receive paychecks; 400 new hires in the hard-hit construction industry; $21-an-hour average wages across multiple 

trades, from weatherization to HVAC to plumbing to electrical; 56 

percent of work hours performed by women and people of color; 36 

veterans working on projects; $65 million in economic development; 

and counting. 

Before we began our work a few years ago, this market was 

small. About 200 homes were upgraded per year, and workers were 

paid piece-rate wages averaging around $9 an hour, no benefits. 

We are now lifting people out of poverty and into career pathway 

professions. 

How do we generate these numbers? It all comes down to making 

it easy for citizens to upgrade their homes for energy efficiency. 

The way it works for a homeowner is they sign up at our website; 

we arrange an energy assessment of their home and pair them 

with a vetted contractor; a scope of work is drafted and agreed 

upon by the contractor and the homeowner; we arrange financing 

from a local lender; and we provide quality control and customer 

service throughout the project. 

Currently, more than 100 small- to medium-sized contracting 

firms are growing their businesses in the program, and multiple 

private lenders are providing unsubsidized financing. These lenders 

include several credit unions, a regional bank, and a community 

development financial institution. Loan products include secured, 

unsecured, home equity and ‘‘on-bill,’’ meaning that customers can 

pay back their loans through the utility bill. So private investment 

is happening in energy efficiency, initially spurred on by public investment. 

As you know, a coordinated effort to retrofit America’s inefficient 

housing stock would create hundreds of thousands of U.S. jobs in 

some of the hardest-hit industries, as you mentioned, including 

construction and manufacturing. These are primarily small business jobs that cannot be outsourced, using materials that are on 

average 90 percent made in the U.S.A. In Oregon alone, we estimate there are 600,000 homes in need of weatherization, an $8 billion economic opportunity that could create 60,000 jobs. 

So I would like to conclude by highlighting a few policy issues 

for your consideration. 

First, on real estate valuation, a key component to the future, 

the Sensible Accounting to Value Energy, or SAVE, Act, Senate bill 

1106, was introduced by Senators Bennet and Isakson in June of 

last year. This legislation would improve the accuracy of mortgage 

underwriting used by Federal mortgage agencies by including energy efficiency as a factor in determining the value and affordability of a home. 

And on financing, Senators Cardin, Feinstein, and Schatz introduced Senate bill 2189, the Energy Efficiency Tax Incentives Act, 

last month. This legislation includes the first performance-based 

energy efficiency tax incentive—25E in the Tax Code. This tax incentive would provide between $2,000 to $5,000 to homeowners 

based on their energy savings. This approach would let the market 

determine the technology put in the home. Tax dollars would essentially be investing in savings from what you could consider miniature power plants represented by bundles of home energy retroVerDate Nov 24 2008 11:14 Dec 19, 2014 Jkt 046629 PO 00000 Frm 00010 Fmt 6633 Sfmt 6633 L:\HEARINGS 2014\05-07 DRIVERS OF JOB CREATION\HEARING\50714.TXT JASON
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fits, and those tax dollars would also be investing in the multiple 

public benefits those savings provide, notably job creation. 

Thank you very much for your support and consideration. 

Chairman MERKLEY. Thank you, Mr. Smith. 

Mr. Emil Frankel. 

STATEMENT OF EMIL H. FRANKEL, VISITING SCHOLAR, 

BIPARTISAN POLICY CENTER 

Mr. FRANKEL. Thank you, Mr. Chairman. I appreciate this opportunity to address this important issue. Before proceeding, I would 

like to request that my full written statement be made part of this 

Committee’s hearing record. 

Chairman MERKLEY. Without objection. 

Mr. FRANKEL. I would like to say that this issue of the interrelationship between transportation and infrastructure investment 

has dominated our work on the National Transportation Policy 

Project at the Bipartisan Policy Center, which work I directed. 

Most relevant, in January of 2011, we issued a white paper entitled, ‘‘Strengthening Connections Between Transportation Investments and Economic Growth’’, which was co-authored by two members of our project: Douglas Holtz-Eakin, former CBO Director, and 

Martin Wachs, of the University of California. 

Increasingly, over the past 25 years, as a State and Federal 

transportation official, a consultant, teacher, and policy contributor 

on transportation and infrastructure issues, I have come to appreciate the role that these investments play in building economic 

growth and prosperity. This has been true throughout American 

history, from the days of roads and canals and Henry Clay’s and 

Abraham Lincoln’s internal improvements, through highways and 

airports, and it has been recognized going back to Secretary Albert 

Gallatin, Thomas Jefferson’s Treasury Secretary, to Dwight Eisenhower. 

In my own teaching, I have made extensive use of a book by a 

distinguished economist, Peter Bernstein, called ‘‘Wedding of the 

Waters’’ about the building of the Erie Canal at the beginning of 

the 19th century. It was, of course, an engineering and construction 

miracle, but most importantly, from Bernstein’s point of view, was 

how this investment in infrastructure in a transportation facility 

changed the economy of the State, the region, and the Nation. The 

Erie Canal connected newly settled areas of the Midwest and the 

Great Lakes to the original States and allowed agricultural products to flow from west to east and industrial products from east to 

est. New cities were born, and old cities got a new economic function. For example, New York City, because of the Erie Canal, reinforced its pre-eminent position as America’s center of finance, commerce, and international trade, a position that it has held for 200 

years. 

Similarly, as William Cronan wrote in his monumental ‘‘Nature’s 

Metropolis’’, the coming of the railroads to Chicago not only 

changed that city but fundamentally altered the economies and the 

natural and built environments of both Chicago and of the Plains 

and western regions of the United States. 

A March 2012 report by President Obama’s Treasury Department with CEA noted that the United States has a rich history of 

8 

investing in infrastructure and reaping long-term benefits. Those 

benefits include both the long-term economic growth and the shortterm effects of stimulating maintenance and creation of construction and construction-related jobs. 

While infrastructure investments play an important role in stimulating construction jobs, quantifying the multiplier effect, the jobs 

multiplier effect, is difficult. But I think as was noted in the BPC 

white paper, to which I have referred, and I am quoting from it, 

‘‘Short-term job creation, while vitally important, must be viewed 

within the context provided by a long-term view. Over the longterm, higher productivity . . . is the key to higher labor earnings 

and improved standards of living.’’ It is the long-term economic 

benefits, in terms of productivity, efficiency, access to markets, and 

labor force flexibility, which should be the goals and purposes of 

public investment in transportation and other infrastructure investment. 

But selecting the appropriate infrastructure investments, those 

that promise the greatest short- and long-term economic benefits in 

a time of persistent budget deficits and stagnant public spending, 

is a difficult challenge to public policy leaders. Public investment 

capital is constrained, and the reality is that Federal transportation spending is likely to be under economic pressure for some 

time to come, despite compelling evidence that we have been falling 

consistently short of making the infrastructure investments we 

need to sustain an efficient, safe, environmentally sustainable, and 

well-functioning transportation network. 

The priority, then, needs to be on making ‘‘wise’’ infrastructure 

investments, that is, those that promise the greatest economic benefits in terms of increased productivity, efficiency, and job creation. 

Unfortunately, for the most part—there are exceptions, but for the 

most part, the United States’ framework for planning, analyzing, 

and making decisions about infrastructure investments is really 

not up to the job of making these tough, wise investment decisions. 

I think that is an important challenge to the Congress as it considers transportation reauthorization legislation. 

I think also the funding limitations puts a greater burden on financing and a greater burden on States and localities. 

None of these policy initiatives, whether it is infrastructure 

banks or public–private partnerships or expanding TIFIA, remove 

the need to make better and wiser choices. Smart, wise infrastructure investments are critical to economic growth and long-term job 

creation. 

Thank you very much. 

Chairman MERKLEY. Thank you. 

And we will proceed with Dr. Dietz. 

STATEMENT OF ROBERT DIETZ, VICE PRESIDENT FOR TAX 

AND MARKET ANALYSIS, NATIONAL ASSOCIATION OF HOME 

BUILDERS 

Mr. DIETZ. Thank you for the opportunity to testify today. My 

name is Robert Dietz, and I am an economist with the National Association of Home Builders. NAHB represents all sectors of residential real estate development—single-family, multifamily, remodeling, and businesses connected with supplying and financing those 

9 

activities. Home building is also an industry dominated by small 

businesses. 

The residential construction industry was hard-hit by the Great 

Recession. Home construction fell 75 percent from 2005 to 2009, 

and the industry lost almost a million and a half jobs. But since 

2011, the home building and remodeling sectors are growing again. 

Over the last 21⁄2 years, 274,000 jobs have been created. 

This job creation has occurred because of significant improvement in housing starts. From 2009 to 2013, total starts grew by 67 

percent, reaching an annual total of 925,000. This expansion has 

had direct economic benefits. NAHB estimates that, on average, 

the construction of 1,000 single-family homes provides enough work 

to create 2,970 jobs—roughly 3 jobs per single-family home. 

Additionally, construction of 1,000 rental apartments, including 

units developed under the Low-Income Housing Tax Credit Program, generates 1,130 jobs, roughly 1 job per multifamily home. 

And $100 million in remodeling expenditures creates 890 jobs. 

This job impact is broad-based across sectors and across the Nation. For example, somewhat more than half of these jobs are created in the construction sector, with the rest in other sectors in the 

economy. 

The health of housing is key for the overall state of the U.S. 

economy. Currently, housing represents about 15.5 percent of GDP 

through a combination of housing services and the investment produced by builders, by adding or improving homes. 

Nonetheless, housing has room to grow. Typically, housing represents 17 to 18 percent of GDP. With a growing population and 

an aging housing stock, NAHB forecasts that single-family construction will increase 22 percent in 2014, with 6 percent additional growth for multifamily. 2014 should, in fact, be the first year 

since the recession in which the total number of housing starts exceeds 1 million homes. And this expansion will produce jobs. In 

April alone, builders and remodelers added 13,100 jobs. 

The Great Recession was an important if painful reminder of the 

key role that housing plays as a source of household savings. According to Federal Reserve data, primary residences accounted for 

42 percent of a typical homeowner’s wealth. And savings in a home 

are also widely held. Roughly 65 percent of households own a home 

while only 50 percent possess a retirement account and only 16 

percent own stocks and bonds outside of such an account. 

Housing, of course, also plays a key role in the health of our society. Access to safe and decent and affordable rental housing is 

needed for those households for whom renting is the best choice. 

And for those able to assume the financial responsibility of owning 

a home, home ownership has been shown across an array of academic studies to produce a rich set of social and individual benefits, 

including increased neighborhood participation and improved education and health outcomes. 

While home construction is poised to continue to expand and add 

jobs, certain industry head winds exist. These include access to 

building lots, rising building material prices, access to builder 

loans, and worker shortages in some markets. And an additional 

head wind is the lack of policy certainty in areas connected to housing. Providing certainty in these areas, including enacting a tax exVerDate Nov 24 2008 11:14 Dec 19, 2014 Jkt 046629 PO 00000 Frm 00013 Fmt 6633 Sfmt 6633 L:\HEARINGS 2014\05-07 DRIVERS OF JOB CREATION\HEARING\50714.TXT JASON
10 

tenders bill and passing comprehensive housing finance reform, 

would be a net positive for job creation. And fostering job training 

for those interested in becoming home builders and remodelers will 

pay dividends. In particular, support for job centers and the community college system will ensure that the next generation of construction professionals will fill the jobs of the future, including 

building new homes and making the existing stock of homes more 

energy efficient. 

In conclusion, housing provides the momentum behind an economic recovery because home building and associated businesses 

employ such a wide range of workers. Housing can be a key engine 

of job growth that this country needs. 

Thank you, and I look forward to your questions. 

Chairman MERKLEY. Thank you very much. 

And now we will turn to our fifth presenter. President 

Buffenbarger, thank you so much for coming. 

STATEMENT OF R. THOMAS BUFFENBARGER, INTERNATIONAL 

PRESIDENT, INTERNATIONAL ASSOCIATION OF MACHINISTS 

AND AEROSPACE WORKERS 

Mr. BUFFENBARGER. Thank you, Chairman Merkley, Ranking 

Member Heller, and Members of this Committee for the opportunity to testify before you today on the vital importance of manufacturing to the creation and preservation of American jobs. My 

name is Tom Buffenbarger, and I serve as International President 

of the International Association of Machinists and Aerospace Workers, also known as the IAM. Our members work in a variety of 

manufacturing industries including aerospace, electronics, defense, 

shipbuilding, transportation, and forest products. The IAM is a 

broadly diversified manufacturing union and the largest aerospace 

union in North America. We strongly believe that manufacturing is 

critical to our national economic recovery. Manufacturing is responsible for the good jobs that our Nation needs. It also generates the 

innovation and new technology which our Nation depends upon to 

ensure a healthy, robust, and sustainable economy in the future. 

According to the U.S. Bureau of Labor Statistics, the manufacturing sector contributes $1.6 trillion in value to our economy, or 

about 9 percent of GDP. A recent study by the Congressional Research Service notes that manufacturers have been responsible for 

approximately 70 percent of all research and development conducted by businesses in the United States. 

Manufacturing jobs are good jobs. Workers in the manufacturing 

sector enjoy an 8.9-percent compensation premium over other 

working Americans and are more likely to have employer-paid 

health care and other benefits. Since the start of the 21st century, 

education levels for manufacturing workers have improved; nearly 

30 percent have at least a college degree, and the percentage with 

less than a high school diploma has shrunk to 10 percent. However, 

what has made manufacturing a source of middle-class jobs has 

been the traditionally high rate of unionization within the sector. 

The Center for American Progress notes the disturbing correlation 

between the decline of union density and the share of the Nation’s 

income going to the middle 60 percent of households, which has 

fallen from 52.3 percent to 45.7 percent since peaking in the late 

11 

1960s. If this trend continues, then manufacturing work will not be 

the ladder to the middle class as it historically has been. 

The effect of the manufacturing sector and the jobs that it produces can be found in the sector’s multiplier effect. This can be 

seen in two ways. The Manufacturing Institute has found that 

every dollar of manufactured products supports $1.33 in output 

from other sectors, a larger multiplier than any other economic sector. In other words, manufacturing creates the wealth that drives 

much of our economy. 

Moreover, manufacturing jobs support additional jobs, both direct 

and indirectly related to manufacturing, throughout the economy, 

and the multiplier ratios from manufacturing vary from a low of 

1:3 to high of 1:16. The difficulty in coming up with a precise ratio 

derives from the changing nature of manufacturing jobs and what 

is counted as a manufacturing job. In the past, many manufacturing enterprises were vertically integrated operations that included a variety of support functions, such as shipping and transportation, as well as professional and business services like accounting, legal, and consulting. If any of these functions are directly employed by a manufacturer, then they are counted as manufacturing jobs; otherwise, the jobs are considered indirectly related to manufacturing. Other examples of indirect employment impacted by manufacturing activity include jobs in restaurants, retail, 

as well as local and State government. 

According to last week’s employment report, manufacturing employment currently stands at 12.1 million jobs, nearly 9 percent of 

U.S. payrolls. Significantly, even with the addition of 650,000 manufacturing jobs since the bottom of the Great Recession, the U.S. 

has still lost over 5 million manufacturing jobs since the start of 

this century. While a variety of factors, including technological 

changes and lean manufacturing practices, have reduced overall 

manufacturing employment, the lack of a comprehensive manufacturing policy that is directly related to jobs, our flawed trade policies, and a ballooning trade imbalance—$475 billion in 2013—have 

also contributed to this decline. 

This year marks the 20th anniversary of NAFTA, which increased our trade deficit with Canada and Mexico by $150 billion 

resulting in a loss of an estimated 1 million U.S. jobs. For our 

members at companies like Maytag and Freightliner who saw their 

work and their jobs move to Mexico, the harsh reality of this model 

of trade is not a theoretical discussion. 

An even bigger killer of U.S. manufacturing jobs has been the 

implementation of the PNTR with China. When China PNTR was 

passed in 2000, the U.S. exported three times as many manufactured goods as China, but within a decade China surpassed the 

U.S. in exports and became the world’s leading manufacturer and 

exporter. By 2012 our share of global manufacturing activity had 

declined to 17 percent from 30 percent just a decade earlier even 

as the value of our exports had more than doubled. Now, two-thirds 

of our global trade deficit is with China, a rapidly growing country 

that engages in a variety of unfair trade practices—illegal subsidies, forced technology transfer, currency manipulation, and an 

appalling lack of labor rights. 

12 

The Economic Policy Institute estimates that over the last decade 

our trade imbalance just with China has cost the U.S. nearly 3 million jobs and put downward pressure on U.S. wages. And now, just 

2 years after the passage of the U.S.–Korea FTA, we have seen our 

exports to Korea drop and our trade deficit with that country grow 

with a loss of an estimated 60,000 American jobs, mostly in manufacturing. 

Successful countries recognize the importance of a strong manufacturing sector and the true nature of global competition. These 

countries know that there is no such thing as a ‘‘free market’’ and 

provide strong support for critical wealth and job-creating sectors 

like manufacturing. 

The IAM has long called for the development of a national manufacturing strategy as our global competitors have done. This is not 

about picking winners and losers but, rather, creating the foundation for future prosperity. We applaud the President for taking 

steps to make this happen. The creation of the Office of Manufacturing Policy reporting to the National Economic Council, as well 

as the Advanced Manufacturing Partnership. which includes representatives from labor, industry, academia, and the Federal Government, has put a new focus on manufacturing at the highest levels of Government. 

We look for the Advanced Manufacturing Partnership to develop 

a national manufacturing strategy that links Government policies 

and investment to actual job creation. This could be accomplished 

by requiring employment impact statements as part of the decisionmaking process for Government procurement contracts, grants, and 

awards. Simply stated, contracting agencies and policy makers 

should know how many good domestic jobs will be created and 

maintained by a contractor or grantee. 

Our trade policies must be reformed to include enforceable labor 

rights and environmental protections, and this is particularly important as the U.S. negotiates the Trans-Pacific Partnership, or the 

TPP, with countries like Vietnam and Brunei that lack free and 

independent labor unions. Also, enforcement action must be taken 

to end currency manipulation by our global competitors. 

There are many other steps that also will include strengthening 

the measure and standardizing the measure of Made in the U.S.A. 

and Buy American requirements for Government procurement contracts. In some cases, the domestic content requirement is as low 

as 51 percent, and it is not always clear that agencies limit their 

calculation of domestic content. 

One Government initiative, the Export-Import Bank, stands out 

as a success. The Export-Import Bank provides critical financing 

for the export of American-made goods and services. Last year, the 

Bank provided over $37 billion worth of export financing that supported over 200,000 American jobs, mostly in manufacturing, and 

returned $1 billion to the U.S. Treasury. 

Manufacturing plays a critical role in our economy. The sector is 

an engine of innovation and a source of middle-class jobs. We must 

not, however, take the sector for granted. America needs to think 

strategically about how we prepare our workforce, what investments we make to remain globally competitive, and how we trade 

with other Nations. For too long our focus has been on meeting the 

13 

needs of U.S.-based multinational corporations at the expense of 

working Americans. This culture must change. Only then will we 

see a rebirth of American manufacturing—a rebirth that is essential for our national and economic security, and the future of America’s hard-working men and women and their families and their 

communities. 

I would be happy to answer any questions that the Committee 

may have. Thank you, Mr. Chairman. 

Chairman MERKLEY. Thank you, all of you, very much. I have 

been so struck by the fact that in the last recession 60 percent of 

the jobs we lost were good-paying or living-wage jobs, yet only 40 

percent of the jobs we are getting back fall into that category. The 

difference of that 20 percent means that millions of families across 

America who had the American dream in their hand—a good, solid 

job, one with benefits, the ability to save a little to assist their children and launch them into the world—are now seeing that dream 

crumble and slip through their fingers. And these are very concrete 

areas, these areas of infrastructure and rebuilding the building infrastructure with energy-saving retrofits and home construction 

and manufacturing that can make a difference. 

I am going to ask some questions of each of you. I will follow the 

general pattern, but since there is only one of me and my panel 

members are not here, please feel free to indicate you would like 

to jump in on some of these questions so we create a little bit more 

of a conversation. And Senator Elizabeth Warren has indicated she 

is trying to wrap up her other Committee and is on the way. So 

we may have reinforcements soon. 

Jennifer, I thought I would start with your point about aggregate 

demand, and if I understand right, this is the point that people do 

not make something if you do not have someone to sell it to. But 

there are others who have said, you know, the real key is not aggregate demand; it is concentrating wealth among the very few at 

the top because they will devise and build new factories, create 

new jobs, new job employment strategies. 

So as you think about those two different theories, essentially aggregate demand and, if you will, a concentration of wealth at the 

top, what is the case that favors one theory over the other? 

Ms. ERICKSON. Thank you so much, Mr. Chairman. I think the 

case that favors the argument for aggregate demand and the importance of the middle class is that we tried the other way. Supply 

side economic policies were de facto what was in place for a lot of 

America’s last 15 years, and what we saw was exactly this concentration of wealth that you mentioned at the top. 

In fact, if we look at all income gains since 2009 when we entered recovery, 95 percent of those income gains have gone to the 

top 1 percent. And so the reality is that the top 1 percent does not 

have the ability to drive the demand that is needed to employ more 

American workers and for businesses to feel the need to invest. It 

is no mystery that U.S. businesses are currently sitting on about 

$2 trillion in cash. That is because they do not think that there are 

enough customers on the other side if they make those investments. In fact, it was the former adviser to Presidents Ronald 

Reagan and George H.W. Bush, Bruce Bartlett, who wrote back in 

14 

2011, ‘‘It is the demand.’’ That was the headline of a major national 

piece. 

And so I think that the reality is that the sooner we realize that 

businesses need customers, the sooner we will realize that we need 

a strong and growing middle class and policies that will support 

that. 

Chairman MERKLEY. So, in short, if concentration of wealth at 

the top was the key, we would have more jobs now than ever before 

since we have more concentration of wealth; and, therefore, the 

model has been tested, it has failed, and it shows that people are 

not going to keep creating more factories and employing more people if there is no one to buy the product. 

Ms. ERICKSON. Absolutely. In fact, venture capitalist Nick 

Hanauer, who is from Washington State—he was one of the original investors in Amazon. He wrote a piece in Bloomberg a couple 

of years ago where he said, ‘‘A typical middle-class consumer is 

more of a job creator than I can ever be.’’ And his point was that 

while he makes about 1,000 times a year as much as a typical 

American worker, he is not going to buy 1,000 times as many pairs 

of pants or pillows or dinners. And so he was addressing this not 

just from the reality of the type of character of country he wants 

to live in where there is more opportunity in the middle class, although we would certainly believe that is important; but also a 

matter of hard economics, that even if you are looking at it from 

a purely business perspective, you need customers. 

Chairman MERKLEY. So in this sense, what turns out to be very 

good for the middle class is very good for the entire economy. 

Ms. ERICKSON. Absolutely. Absolutely, and for the private sector, 

too. Again, I think if you look at what is happening both in small 

businesses and large businesses, the single biggest thing that 

comes up when they are asked what is their impediment to growth 

and hiring more workers is demand. They need to know there are 

customers there if they are going to open a new set of doors. 

Chairman MERKLEY. So I want to turn next to the issue of infrastructure, and, Mr. Frankel, you addressed this as well as Ms. 

Erickson in the beginning. One of the statistics I was struck by is 

that China is spending roughly 10 percent of its GDP on infrastructure. And I went to China a decade apart. On my first trip, I saw 

largely bicycles in Beijing, and on my second trip, not only were the 

roads clogged with cars, but I also got on a train that went 200 

miles per hour. And that was a phenomenal change in infrastructure, and I saw that all over China. 

I understand Europe is spending 5 percent of its GDP on infrastructure and America just 2 percent. If these numbers are not 

right, please correct me. But what does it mean for a major developed country if we are investing far less of our economy in infrastructure than, if you will, our European competitors and upcoming 

countries like China? I do not know if either of you would like to 

jump into that. 

Mr. FRANKEL. Well, respectfully, Mr. Chairman, I am not one 

who really looks to what other countries are doing. I think it has 

some relevance, but China is certainly at a very different place in 

its development from the United States. And it is to be expected 

that it would be spending a much higher percentage of its GDP on 

15 

infrastructure. We spent a much higher percentage when we were 

building the Interstate Highway System. 

The question I think is more are we spending enough or not in 

terms of our own needs, in terms of our own capacity to remain 

competitive, and that is without regard to, you know, what China 

is spending or some other country is spending. 

Similarly, in terms of the high-speed rail system, we need to provide the kind of infrastructure which meets the needs and can 

bring the greatest benefits in a time of fiscal constraint. You are 

dealing with that much more directly than I am. You are dealing 

with scarce resources, the issue about how to divide a, if not 

shrinking, not adequately growing Federal pie, Federal funding. 

Congress has kind of established a policy as much by inaction as 

by action and thought over the last 10 years and, that is, Federal 

funding in terms of transportation infrastructure, as I noted in my 

statement, is actually in real terms declining. That is inappropriate 

in terms of providing for a productive economy. 

I was struck—I make reference to this in my written statement, 

as you probably noted. I was more recently in the United Kingdom. 

They have a conservative-led Government, which has a commitment to a policy of austerity, and they are still spending what they 

think they need to spend on wise investments. Particularly, I spent 

a good deal of time in London and got some briefings on a project 

called ‘‘Crossrail’’, which is a brand-new subway line across Greater 

London. It is a $15 billion or almost $20 billion investment at a 

time of austerity. It was a decision to go forward by a Labour 

Chancellor of the Exchequer, pursued by a conservative Chancellor 

of the Exchequer, because of a perception of an analysis which 

showed that in their case the London region was an engine of economic growth for the United Kingdom and that an investment in 

improved access, improved labor mobility, and enhancing the agglomeration economics of the financial industry and financial sector 

in the London region was absolutely critical to ongoing growth of 

the United Kingdom and was based on a very careful business case 

and benefit-cost analysis. 

We need to be able to do that in order—those are the kinds of 

decisions, rather than looking to what percentage China is spending or some other Nation is spending and what they are spending 

it on, what do we need to spend, what are wise investments for us 

which benefit long-term economic growth? 

Chairman MERKLEY. I take your point that we should be in the 

context of are we spending enough for our infrastructure. What I 

see in kind of an anecdotal way—and I do a town hall in every 

county each year of our Oregon 36 counties—and I meet beforehand with the city commissioners and the county commissioners 

and ask them what is going on, what are they challenged by. And 

they are always raising infrastructure issues. And one of the things 

that is very common for them to raise is water infrastructure, and 

what they tend to say is, ‘‘We built this water system that we love 

decades ago,’’ often post-World War II, that it now has three problems: first, it is wearing out; second, it does not meet the modern 

standards for either clean water supply or wastewater treatment; 

and, third, we need to plan for an expanded water supply or wastewater treatment for additional growth to be able to occur. 

16 

And given those three things and kind of the common sense that 

those were a major—in terms of the feedback of local officials, feedback in terms of what is constricting their economy, I have sponsored a bill called ‘‘WIFIA’’, or the Water Infrastructure Financing 

Innovation Act, modeled on TIFIA, which you mentioned in your 

testimony, the goal being to provide more low-cost funding for this 

type of infrastructure to be built. 

Any insights or thought about—often we talk about roads and 

bridges, but any thoughts about how important water infrastructure is to our future? 

Mr. FRANKEL. Well, it is obviously critical, and we are going to 

have to invest in water resources. Our inland waterways may be 

less relevant in your State, but certainly in the middle part of the 

United States, we have systems of locks and dams that are 100 

years old. We talk about the transportation system, and it does not 

compare to elements of the inland waterways in terms of the need 

for upgrading and restoration. 

Certainly in metropolitan regions, New York to its credit has 

made major efforts to prevent leakages from an old water system, 

and we lose tremendous amounts of water, when water is becoming 

a more and more valuable resource, from leaks and breakdowns in 

major water systems for major metropolitan regions. So I think this 

is critically important. 

In terms of the particular—and I commend you for the initiative 

in terms of the financing initiative, as I mentioned, if funding is 

going to be flat or decline at the Federal level, if the burden is 

going to be greater on States and localities, the Federal Government should expand its financing capabilities, that is, offering 

greater credit to State and local governments, allowing them to leverage Federal resources by putting their own resources in, as well 

as raising private resources. All of that is critically important, although it does require the establishment of adequate revenue 

streams, whether it is for transportation or water projects, in order 

to service the debt of provide returns if there are private investors 

involved. 

But as I think I mentioned in my written statement, my colleague, Aaron Klein, who is an alumnus of the staff of this Committee, and I wrote an op-ed about 8 or 9 months ago about the 

need—that what was happening really was a shift from Federal 

funding to Federal financing, and drawing that distinction is important, and taking advantage of and trying to ride that and maximize the opportunities. 

I might mention one other thing, actually your comments, Senator, reminded—I do not know if this is still the case. I suspect it 

is. When I was at the Department of Transportation now 10 years 

ago, I know a huge issue in Oregon was the state of the bridges 

on the interstate system, particularly on the I–5. And it is an example of, with limited, scarce Federal funding available, what 

should we be putting it into. And I would make the strong argument, for example, in the case of Oregon, where they would like to, 

they need to restore and rebuild and in some cases replace those 

bridges; otherwise, the whole system of mobility, including freight 

and goods movements, to, from, and through the State of Oregon 

will come to a stop. Think about the economic impacts of that, as 

17 

I know you have. Think about the economic benefits, huge economic benefits in terms of cost and investing in our existing infrastructure maximizing its effectiveness and allowing it to contribute 

to a growing economy. 

Chairman MERKLEY. I think as you may know, Senator Murray 

has for a very long time, long before I ever came to this body, 

worked very hard to line up the particular project, the last drawbridge on I–5 on the North-South Freeway, and it had rather a 

rough course over the last 2 years. But because the need still remains as a key part of our freight and passenger transportation, 

I am sure we going to be revisiting that piece of infrastructure. 

Point taken. 

I wanted to particularly emphasize a point, if I caught it right, 

that 90 percent of the jobs from infrastructure would be middleclass jobs. Did I catch that right in your analysis? 

Mr. FRANKEL. I made reference to the Treasury–CEA report in 

2012, and it identified—I think the figure was 80 percent of the 

jobs, as I remember—it is in my written statement—of the jobs 

that would benefit from investment in infrastructure would fall 

into the percentiles between the 25th and 75th percentile, the construction and construction-related, because most of the jobs are in 

construction and manufacturing, and most of those jobs fall into 

those middle-class percentiles in the economy. 

Chairman MERKLEY. Yes, that 80 percent of the jobs created by 

investing in infrastructure would be in construction, manufacturing, and retail, and that 90 percent of these would be middle 

class. That is a powerful recognition of how much connection there 

is between building this needed infrastructure for the general economy but also at the same time creating those living-wage jobs. 

While we are still on the infrastructure, did you have anything 

you wanted to add to that? 

Ms. ERICKSON. The only thing I would say is that U.S. public 

construction spending as a percentage of GDP has dropped to its 

lowest point in 20 years, and while we can all agree that the question is are we meeting the needs of our workers and our businesses, I also think the answer to that has been a resounding no, 

we are not. So that is why you are seeing different bedfellows from 

the AFL to the Chamber of Commerce standing up together and 

saying that this is really a time when we need to act. 

So it is my sincere hope that we will see some bipartisan movement on this in Congress. I think that staying too focused on every 

dollar of Government spending as if it is exactly the same as part 

of an overlong and, in my view, sometimes misguided deficit fight 

really risks our fiscal future in the long term as well as our jobs 

picture today. 

Chairman MERKLEY. Thank you very much. 

I am going to turn now to Mr. Smith, and a different sort of infrastructure is our building infrastructure and rebuilding our buildings to make them more energy efficient, as you know, to create a 

lot of jobs. There was a statistic that you utilized, which I believe 

was Oregon could create 60,000 jobs. Can you repeat the conditions 

that would be necessary to create those jobs just in the energy retrofit field? 

18 

Mr. SMITH. Yes. So the data that we have gathered to date has 

been that for every 10 homes that get upgraded for energy efficiency, one job gets created, and that is proven data that we have, 

working on this for many years, and is actually consistent with 

what the home builders—as we discussed before, the testimony. 

And so the analysis we have done in the State is that there are 

600,000 homes. These are prequalified homes that are owner-occupied, that are in need of weatherization, that we can go after now, 

but we have to raise demand to get to them. Again, it comes back 

to demand. And so, therefore, that results in 60,000 jobs. 

Chairman MERKLEY. OK. I realize that Oregon is 1 percent basically of the Nation, and that would mean a potential for 6 million 

under a roughly similar ball-park, back-of-the-envelope calculation, 

so a key piece. 

Mr. SMITH. That is right. 

Chairman MERKLEY. And in terms of customers actually saying 

it is convenient and easy and financially possible to do these retrofits, how important is low-cost financing and how important is onbill financing? 

Mr. SMITH. Financing is a critical tool in the toolbox, and on-bill 

is a very important piece of financing. I would underscore that capital is not the only issue. I appreciate the focus on demand in this 

testimony because from you standpoint, we need to get energy efficiency retrofits to be valued by citizens, like a kitchen remodel or 

a bath remodel. Again, this is remodeling that should be considered 

not only for the benefits that it provides in terms of better comfort 

in the home, but also that there is better health in the home, the 

homes are safer, and that there will be a return in the result of 

a sale transaction, so a financial return. And the way we can really 

get all those demand drivers moving, not only by providing more 

capital, is to promote policies that support real estate valuation. 

And then in the meantime, as demand continues to grow and we 

result in all these benefits of health and safety and job creation, 

investments in rebates like the ones I mentioned and the policy 

site I mentioned are really important and they are smart investments that the public sector can make because of all these benefits 

of job creation, health, safety, et cetera. 

And I just want to add, just also to link infrastructure and demand, that we recently started adding services of seismic strengthening, radon mitigation. We will go into storm water, electric vehicle infrastructure. So any services that help make the home ready 

for the future and help the homeowner and occupants be safer, 

healthier, spend less on those resources, that is where we want to 

go. It creates more jobs, creates more business development opportunities for these small contracting firms, creates more private investment. And it is just great all the way around. We are achieving 

multiple public policy objectives in one fell swoop. 

Chairman MERKLEY. And if I can go back to your estimate on the 

60,000 jobs, that is homes only. So there is a huge potential also 

in the commercial side in addition. 

Mr. SMITH. Absolutely, yes. 

Chairman MERKLEY. I would like to welcome Senator Elizabeth 

Warren, who has been able to join us. We have been talking quite 

a bit about infrastructure and now also on energy-saving retrofits 

19 

and their role in creating jobs and how many of these jobs in these 

two areas are also good-paying middle-income jobs. So I have had 

the privilege of carrying on the conversation for a while, and so 

would you like to take 5 minutes and jump in? 

Senator WARREN. I would. Thank you very much. I appreciate it, 

Mr. Chairman. I apologize for not being here earlier. I am caught 

in two committees at the same moment. We have another committee that is about NIH funding and cancer research, so I apologize for not being here. But I had some questions I wanted to ask 

about that I thought were important here. 

I was looking through some data, and according to the National 

Institute of Standards and Technology, manufacturing is responsible for about 12 percent of our GDP. Every dollar spent in manufacturing generates about $1.48 in economic productivity in other 

sectors of the economy. So we have got a powerful multiplier out 

of investments in manufacturing. 

The growth in manufacturing is very important to the economy, 

but if manufacturers cannot get adequate funding, then growth is 

obviously held back, and that means that they cannot take on more 

orders, hire more people, make more shipments, that sort of thing. 

Now, a recent study from NIST which analyzed the results of a 

national survey for manufacturing companies found that a lack of 

access to capital was one of main obstacles to manufacturers’ ability to remain profitable, to expand their operations, and to compete 

with larger companies—cannot get the money, cannot make the investments, cannot have a business that prospers and then grows. 

So the question I would like to ask—and I will ask it to anyone 

on the panel—is: How do we think about sustaining, expanding, 

capital—making capital available to manufacturers, particularly to 

smaller manufacturers? Does anyone have thoughts on this or had 

any experience with this? Mr. Dietz, you had the misfortune of 

moving first. 

Mr. DIETZ. I represent the National Association of Home Builders. I would say that is beyond just manufacturing. It is construction as well. 

Senator WARREN. Fair enough. 

Mr. DIETZ. Absolutely a very large issue for home builders. 

Something like two-thirds of the construction in this country is 

done by small firms, firms that are family owned, that have 10 or 

fewer employees, and that access to credit, what is called ‘‘acquisition, development, and construction loans,’’ is a big deal. And a lot 

of that lending comes through smaller banks, so we need to make 

sure that the community banking system is available so you get 

the kind of benefits that come from regional growth. And it is 

also—we have talked a lot about demand. It is also a matter of 

credit for home buyers. And so, you know, people go through a life 

cycle. They rent, they buy. But credit is key to turning that kind 

of macroeconomic concept of demand into kind of a real economic 

benefit at the microeconomic level. 

Senator WARREN. Yes. You know, it is a very powerful point you 

make about the importance of community banks, that community 

banks disproportionately relative to big banks spend more of their 

lending portfolio in small business lending. And I worry about our 

community banks because we all know the number of community 

20 

banks out there is shrinking. They are under a lot of pressure. 

They are under regulatory pressure. They are under other economic pressures. They get swept up in purchases by other larger 

financial institutions. And every time that happens, it is not only 

an impact on that community bank and on the banking system, it 

is also an impact on every small business that counted on that 

community bank for its financing. 

Anybody else want to speak to this? Any other thoughts about 

it? Yes, sir. 

Mr. BUFFENBARGER. Well, from the machinists’ perspective, this 

is an interesting conversation, and we are talking from our own parochial points of view. But what the Government needs to do is 

start thinking big again. The first thing to the safety of community 

banks and support is reinstate Glass-Steagall, handle a few—— 

Senator WARREN. I did not set you up with that answer. 

Mr. BUFFENBARGER. No, no. 

Senator WARREN. Would you please clarify? 

Mr. BUFFENBARGER. But you certainly gave me the opportunity 

to put my 2 cents’ worth in. 

Senator WARREN. Good. 

Mr. BUFFENBARGER. But, Senator Merkley, you pointed out, as 

did others on the panel, the crisis in, for instance, water resources 

in this country. Being an old union, 126 years old this past Monday, we were around at the creation of the Tennessee Valley Authority, and we were designated by President Roosevelt—the machinists and the electrical workers—to build TVA. And if you take 

that concept and expand that nationwide, you address the issues 

of water resources. With that inherently are the other side—sewer, 

waste—but it also has an element of power with it where we generate low-cost electricity. That in turn, when power is cheap, to entice manufacturing to start, and the consumers of that on both 

ends, the manufacturing side, the using end, and those then who 

will benefit from it on the purchasing side, seems to be a self-perpetuating idea. 

And that is something that merits deep thought and a review— 

I mean, all the lessons of the past were not bad lessons. TVA happens to be, I think, one of the—that and Social Security are the two 

great hallmarks of Franklin Roosevelt’s domestic agenda. 

Instead, today we fight because the Government wants to privatize TVA, much as we did the banking community, and our experience as a union with the deregulation, privatization of transportation, of power, of pharmaceuticals, of banks, of just about everything in our lives has been the code word for ‘‘destroy.’’ Why do we 

want to do this? 

So I would recommend the creation on a big thinking level of a 

development bank, a bank that spurs innovation, low-cost loans to 

those who wish to get into the manufacturing business, that we 

give an oversight to assure it does provide jobs, the middle-class 

jobs we are looking for to sustain this country. And if we have got 

the stomach for big-ticket items again and a challenge to America, 

I think this country is looking for that kind of challenge again. 

Senator WARREN. I really appreciate your making that point, Mr. 

Buffenbarger, because you are exactly right, that when we make 

the investments in infrastructure, we not only create good jobs 

21 

right now; we create the right conditions for businesses to be able 

to grow and flourish. Every investment that we make in the power 

grid is an investment in bringing down the cost of production for 

every business out there. You are right. Every investment we make 

in roads and bridges is an investment in being able to get your 

goods to market. And when we make those investments, we have 

another particular to build a future—a future in manufacturing 

and a future in all other business areas. That is a very good point. 

Anyone else want to add? Mr. Smith. 

Mr. SMITH. Yes, Senator, I would like to add a point to your 

great point about community banks, and credit unions, actually, 

and how close they are to their communities, and a point related 

to the work I am in, which is energy efficiency retrofits of homes. 

And before I do that, I just want to credit Senator Merkley for 

your—I meant to mention in my previous statement your efforts to 

get capital to rural communities through working with rural utilities, which is a huge help for those communities. 

What we have experienced is we took U.S. Department of Energy 

stimulus dollars to provide credit enhancements early in the downturn of the economy to motivate private lenders to lend into the 

residential energy efficiency sector. In 2008, there was no lending 

anywhere, but certainly not in this new burgeoning field. And what 

we have been able to do in the past few years is actually unlock 

that private capital, pull the credit enhancements, and have multiple lenders competing for this sector because we created competition among them, and we have found that it has been community 

banks like Umpqua Bank and credit unions like Advantis and 

Selco and others in our State that are closer to the ground, they 

are closer to the communities, they want to support their members, 

they want their capital to go locally. And I find—a little editorial 

here—a little too much attention on the big banks and interest 

from those banks in reaching out their hand for a subsidy, when 

actually it is these small banks that are taking the risk. There is 

enough data in this sector that it is worthy of investment, and I 

believe that if we turn our attention to supporting these community banks, as you pointed out, that the big banks will follow at 

some later point as demand—again, we need more demand before 

they are going to enter the market. We do not need to subsidize 

them. We need to focus on the small guys who are close to the communities. Thank you. 

Senator WARREN. Very powerful point. 

Ms. Erickson. 

Ms. ERICKSON. I think everyone has had really important suggestions. One thing that I would like to mention in addition to support 

for community banks is that, again, the single most important 

thing we need to do for access to capital from my perspective is 

avoid repeating the next financial disaster that will seize all credit. 

The Chairman mentioned that, before I came to the Center for 

American Progress, I was the economic adviser to Scotland’s First 

Minister, which is a tiny country with huge banks. And so I had, 

unfortunately, far too close a ringside seat to what happens when 

credit pretty much dries up overnight, when institutions that are 

hundreds of years old and operate in many countries pretty much 

go away or have to be taken over by the Government. 

22 

And I think that, as important as Dodd-Frank is—and I certainly 

appreciate the leadership of this Committee in getting it through— 

if we were to go ask men and women on the street, ‘‘Do you think 

that the financial sector is safe? Do you feel like your 401(k) is all 

right? Do you trust your banks?’’ I do not think that most people 

in America think that the job is done. I do not think that most people in this room would think that the job is done. And so I think 

one of the most important things now to protect credit and access 

to capital is making sure that the regulations that were so strongly 

fought for in this chamber are actually put into place. 

Senator WARREN. I think that is a very, very good point, Ms. 

Erickson. I think Americans get this. I think people all around the 

country get this. They understand that we have some very large financial institutions that are continuing to load up on risks and 

that it poses a danger to the entire economy. 

You know, the five largest financial institutions which we were 

told back in 2008 were too big to fail, had to be bailed out, are now 

38 percent larger than they were when they were bailed out in 

2008 and 2009. This is not a sustainable path for the United 

States. So I thank you very much because I think you have made 

powerful points around this. 

Going back to Mr. Dietz’s point, finance is important for being 

able to develop manufacturing, to develop markets, to develop all 

of our business activities, and getting it right so that our community banks, our credit unions, the people who are on the ground 

and working with small businesses can make an important difference. But we have got to make sure we do not crash this economy, let the largest financial institutions crash this economy again. 

I thank you all very much on this, and I appreciate this, Mr. 

Chairman. 

Chairman MERKLEY. Thank you. Thank you, Senator. 

I am going to jump back in, following up with Mr. Dietz, in regard to two issues related to home construction, and that is, one 

concern I have is that with fewer families earning middle-class incomes, fewer families will believe they have the power and, in fact, 

de facto will not have the financial power to become homeowners. 

So I would just like you to comment a little bit on that, but also— 

and, by the way, we will have to keep our comments very short because we have votes now scheduled for 3:45, which means we can 

go until 3:50, but then we have to dash over to the Capitol. 

And, second, I read recently that young adults between 25 and 

30 in a short number of years have become half as likely to get a 

home mortgage, in other words, to start become homeowners, 

which obviously affects the long-term number of houses that will 

be sought and purchased. 

Any comment on those two challenges? 

Mr. DIETZ. Yes, I think they are actually connected. One of the 

kind of areas of my research has been to look at demographic challenges. We talk about income distribution. We have talked about 

it here. But we really need to look at age analysis, too. 

One of the things you have seen recently is even though there 

is job creation going on, there has actually been some wage declines, but it has been for people under age 35. When you layer on 

student loans and all the other typical challenges that come about 

23 

those kind of key years of forming households, getting married, you 

really do have a problem for both renter demand and owner-occupied demand. 

So, you know, the Congress needs to look carefully, pass comprehensive housing finance reform to make sure the credit is available for those home buyers, but also make sure credit is available 

for developers of multifamily housing. And a key way that we can 

support the rental housing sector is to protect the Low-Income 

Housing Tax Credit Program, which has obviously been a topic of 

debate in tax reform. 

Chairman MERKLEY. I think one of the things we are hoping— 

and I have signed on to Senator Warren’s bill—is that by reducing 

the interest rates on student loans, enabling folks—in Oregon we 

have 500,000 folks who have student loans—to refinance those at 

4 percent, a lot of those people may be much more likely to become 

customers of the home construction, home ownership world. 

Mr. DIETZ. Eventually. 

Chairman MERKLEY. Yes. And, President Buffenbarger, I want 

to—you made many big points about how we are structuring our 

economy from talking about financing banks for infrastructure, industrial banks, manufacturing, certainly how manufacturing drives 

R&D. Did I catch you right, 70 percent of R&D driven by manufacturing? 

Mr. BUFFENBARGER. Yes. 

Chairman MERKLEY. Yes, substantial, and kind of the whole 

multiplier. But here is an issue that I have seen in manufacturing, 

that we have—we did lose a lot of manufacturers, as you pointed 

out, 50,000 factories, 5 million jobs, due to an unlevel playing field. 

But we also have a challenge that we have to figure out in terms 

of automation. I have been doing a Made in Oregon manufacturing 

tour, and the modern robotics and modern software to drive that 

robotics are phenomenal and are changing what can be done with 

human hands at a cost that can replace workers. This means much 

higher productivity, on the one hand, but it means a lot fewer 

workers, a lot more money going to capital and less to labor. And 

I have always felt if we do not make things in America, we are not 

going to have a middle class in America. But in this case, if we do 

not make things in America with people, we have a challenge. And 

yet, to be competitive with the world, we are certainly going to continue adopting these new technologies. 

So any insights on the challenge of sustaining substantial—not 

just a successful manufacturing sector but ways in which we can 

make sure it thrives so much that it continues to provide livingwage jobs. 

Mr. BUFFENBARGER. Thank you, Senator. As you pointed out, Oregon, which is a great State—and recently I toured the Boeing facility in Portland, a prime example of high technology, yet we are 

hiring there. We are going to be putting the employer there. It is 

going to be adding about 500 new jobs, because the technology enables us to handle the higher volume to meet the demand of the 

marketplace. 

What would help in this realm, if the Government were to insist 

on those Made in America principles we spoke about earlier and 

Made in the U.S.A., maybe we could make the robots here for a 

24 

change. After all, the concept of them was invented here, and we 

offshored it with Government incentives to Nations such as Japan 

and Germany. Maybe we should have kept the technology that was 

devised from defense-related R&D. That was a taxpayers’ investment into the thought process, and then we turn it over to the private corporations who send it overseas and make a big profit off 

of it. 

Where was the taxpayers’ return on the investment? It was in 

the loss of jobs. 

I say that if we are going to use our incentives, tax policies, 

whatever, to promote this type of innovation, this type of R&D, the 

quid pro quo would be it has to be built in the United States. That 

would bring and keep those good, high-tech—high-wage manufacturing jobs here, or at least go a long way toward that end. 

Chairman MERKLEY. And can you comment on the Export-Import 

Bank and the fact that its authorization is expiring this year and 

the role it plays in being able to sell our products to the world? 

Mr. BUFFENBARGER. The IAM is very much in support of renewal 

of the Export-Import Bank. For the aerospace industry, it is the 

best example I can draw on right now. It helps us, the U.S., sell 

our products overseas, to export products. And the fact of the matter is it is the one bank that returns its profit to the United States 

Treasury each year. Last year, it was $1 billion. That is $1 billion 

more than a few other banks I could think of that we used the taxpayer dollar to bail out not too long ago. 

Chairman MERKLEY. Let us give the final question to Senator 

Warren, and then we are going to have to dash. Normally after we 

conclude a hearing, I would be able to stay and chat with folks. My 

team will be staying, but I am going to have to run for the vote. 

Senator WARREN. So we have time for me to just ask a little bit 

more? OK. 

So I have a question about worker training and whether or not 

worker training is good enough to meet the real-time needs of manufacturers. A recent National Association of Manufacturers survey 

indicates that more than 80 percent of manufacturers reported a 

significant shortage in skilled workers and about 75 percent of 

manufacturers said that the skills gap was harming their ability to 

expand their businesses. 

Community colleges can play a valuable role in closing the skills 

gap. In fact, in Massachusetts, we have put something together 

called the ‘‘Rapid Response Grants Program’’, which provides 

money to community colleges so they can respond to workforce 

training needs within 90 days of a company’s request. Last year, 

for example, the State provided funding to MassBay Community 

College so that students could receive training to work at Web Industries, which is an employee-owned advanced manufacturing 

company in Holliston. 

Also, in February of this year, Greenfield Community College announced the expansion of its advanced manufacturing training programs. 

These programs make sense if we are helping workers learn 

skills that will help them over the course of their careers and not 

just subsidizing in-house training for specialized manufacturers 

that they ordinarily would provide. And I just am interested in 

25 

anyone on the panel’s comments about whether this is an approach 

that works or not. We hear a lot about it, but I would just like the 

views of some of the people who are on the front lines on this. 

Why don’t we start with you, President Buffenbarger? 

Mr. BUFFENBARGER. I am the product of a tool-and-die apprenticeship with General Electric jet engines, a very high-tech apprenticeship. It also includes that time with the university. In my case, 

it was Miami University of Oxford, Ohio. All the apprentices with 

General Electric attend university classes. The concept is not so 

much the community college or the university providing the skills. 

They cannot alone. With an apprenticeship, it is hands-on, augmented by that classroom, that instruction, at whatever level it is. 

And so whatever we are going to do in the future, there has to 

be that emphasis placed by this Government with great strength 

and great force behind it to take a serious look at that original 4- 

year degree program called an ‘‘apprenticeship.’’ 

Senator WARREN. I hear you. Thank you. 

Mr. Dietz? And we are going to have to run in just a minute 

here. Thank you. 

Mr. DIETZ. Yes, very quickly, again, that is a very large issue in 

construction right now. You can look at Bureau of Labor Statistics 

data. The number of open, unfilled construction sector positions is 

127,000, which, given the high rates of unemployment, is a bit of 

a paradox, but it has a lot to do with skills. It is also where the 

construction is taking place. But community colleges, job centers, 

NAHB has a subsidiary called Home Builders Institute that helps 

train workers. That is a necessary part of filling these jobs, which 

are available, they are out there, and they are middle class jobs 

that pay about $40,000 a year. 

Senator WARREN. Anyone else want to add to that? Ms. Erickson, 

you get the last word, it looks like here. 

Ms. ERICKSON. I just wanted to say I am so grateful that you 

brought up apprenticeships, because it is something that we are 

very much pushing at the Center for American Progress. We have 

about 375,000 apprentices registered right now in the United 

States. That is a tiny fraction of the apprenticeships that we see 

in countries such as England and Germany, not just in manufacturing, although that is really important, but we can expand them 

into things like IT and health care. And I just want to note there 

is a bipartisan bill before the Senate, the LEAP Act, and so hopefully we will see some progress soon. 

Senator WARREN. Thank you. 

Thank you, Mr. Chairman. 

Chairman MERKLEY. You are welcome, and thank you for your 

participation. And I appreciate so much all the perspectives that 

you have brought on keeping and expanding living-wage jobs in 

America. This is a huge, huge issue for the success of our Nation. 

We should not be judging the success of our economy by the Dow 

Jones or S&P 500. We should not be judging in by the GDP. We 

should be judging it by how many living-wage jobs are we creating 

that provide a strong foundation for families to thrive. 

And so each of you have brought insights related to that central 

question in our economy. I so much appreciate it. I apologize I canVerDate Nov 24 2008 11:14 Dec 19, 2014 Jkt 046629 PO 00000 Frm 00029 Fmt 6633 Sfmt 6633 L:\HEARINGS 2014\05-07 DRIVERS OF JOB CREATION\HEARING\50714.TXT JASON
26 

not stay and talk, but it is a dialog that we are continuing to carry 

on with all of you. 

With that, I will note that the record will remain open for 7 days 

for any questions that Members wish to be submitted, and with 

that, I formally adjourn the Banking Committee Economic Policy 

Subcommittee hearing on job creation. 

Mr. SMITH. Thank you both for your leadership. 

[Whereupon, at 3:56 p.m., the hearing was adjourned.] 

[Prepared statements supplied for the record follow:] 

27 

1The White House, ‘‘Remarks by the President on Economic Mobility’’, Press release, December 4, 2013, available at http://www.whitehouse.gov/the-press-office/2013/12/04/remarkspresident-economic-mobility. 2 Heather Boushey and Adam Hersh, ‘‘Middle Class Series: The American Middle Class, Income Inequality, and the Strength of Our Economy, New Evidence in Economics’’, (Washington: 

Center for American Progress, 2013), available at http://www.americanprogress.org/issues/ 

economy/report/2012/05/17/11628/the-american-middle-class-income-inequality-and-thestrength-of-our-economy/; David Madland, ‘‘Growth and the Middle Class, First Principles: Arguing the Economy’’, Democracy Journal (20) (2011), available at http:// 

www.democracyjournal.org/20/growth-and-the-middle-class.php. 3 Council of Economic Advisers, ‘‘2010 Economic Report of the President’’ (Executive Office of 

the President, 2010), available at http://www.whitehouse.gov/sites/default/files/microsites/economic-report-president-chapter-2r2.pdf; Bob Willis, ‘‘U.S. Recession Worst Since Great Depression, Revised Data Show’’, Bloomberg News, August 1, 2009, available at http:// 

www.bloomberg.com/apps/news?pid=newsarchive&sid=aNivTjr852TI. 4 U.S. Bureau of Labor Statistics, ‘‘Data, Tables and Calculators by Subject: Labor Force Statistics From the Current Population Survey’’, available at http://data.bls.gov/timeseries/ 

LNS14000000 (last accessed May 2014). 5 Bureau of Labor Statistics, ‘‘The Recession of 2007–2009’’ (U.S. Department of Labor, 2012), 

available at http://www.bls.gov/spotlight/2012/recession/pdf/recessionlblslspotlight.pdf. 6 Christopher J. Goodman and Steven M. Mance, ‘‘Employment Loss and the 2007–2009 Recession: An Overview’’, Monthly Labor Review (2011): 3–12, available at http://www.bls.gov/ 

opub/mlr/2011/04/art1full.pdf. 7 Bureau of Labor Statistics, ‘‘The Recession of 2007–2009’’. 

8 Council of Economic Advisers, ‘‘2014 Economic Report of the President’’ (Executive Office of 

the President, 2014), available at http://www.whitehouse.gov/sites/default/files/docs/ 

fulll2014leconomiclreportloflthelpresident.pdf. 9 Jason Furman, ‘‘The Employment Situation in April’’, The White House Blog, May 2, 2014, 

available at http://www.whitehouse.gov/blog/2014/05/02/employment-situation-april; Center 

for Budget and Policy Priorities, ‘‘Chart Book: The Legacy of the Great Recession’’, available at 

http://www.cbpp.org/cms/index.cfm?fa=view&id=3252 (last accessed May 2014). 

PREPARED STATEMENT OF JENNIFER ERICKSON 

DIRECTOR OF COMPETITIVENESS AND ECONOMIC GROWTH, CENTER FOR AMERICAN

PROGRESS

MAY 7, 2014 

Thank you Chairman Merkley and Ranking Member Heller for inviting me here 

to testify. My name is Jennifer Erickson, and I am the Director of Competitiveness 

and Economic Growth at the Center for American Progress. 

It is difficult to imagine a more important issue for the security of both American 

families and the American economy than creating and maintaining good, middleclass jobs. With that in mind, my testimony today will focus on three things: an 

overview of the current jobs picture in the United States, policies that can promote 

job creation in the short to medium term, and also what we need to do to ensure 

a vibrant economic ecosystem in the future. 

Central to all of this analysis is the understanding that if we are going to have 

a strong and growing economy, we need a strong and growing middle class. President Barack Obama rightly identified reigniting the engine of growth of the middle 

class as the defining issue of our time. 1 That is because we know that with a strong 

and growing middle class, we have a more stable source of demand, a bigger pipeline of both entrepreneurs and skilled workers, and the critical support needed for 

public institutions that a vibrant middle class provides. 2

Overview of the Current Jobs Picture 

Between late 2007 and June 2009, the United States underwent its longest and 

most severe economic contraction since the Great Depression, the result of a real 

estate bubble and the ensuing crash that had its roots in lax regulations, opaque 

financial products, and unsustainable household debt. 3

The economy saw a rapid increase in unemployment, from 5 percent in December 

2007 to a peak of 10 percent as of October 2009. 4 This decline in employment exceeded that of any recession over the past few decades 5 and was the first on record 

to wipe away all of the previous job gains of the most recent economic expansion. 6

It has been nearly 5 years since the official end of the recession, 7 and the economy continues to recover. 2013 was the third straight year in which private-sector 

employment rose by more than 2 million jobs. 8 And as of last week’s jobs numbers, 

the U.S. economy has seen 50 straight months of private-sector job growth, adding 

a total of 9.2 million private-sector jobs. 9

While the signs of improvement are encouraging, there is no doubt that the pace 

of the recovery in terms of growth and jobs has been modest and underwhelming 

when we consider the potential labor-force growth during this time. Stubbornly high 

28 

10 U.S. Bureau of Labor Statistics, ‘‘Economic Situation Summary’’, Press release, May 2, 

2009, available at http://www.bls.gov/news.release/empsit.nr0.htm; U.S. Bureau of Labor Statistics, ‘‘Data, Tables and Calculators by Subject: Labor Force Statistics From the Current Population Survey’’, available at http://data.bls.gov/timeseries/LNS14000000 (last accessed May 

2014). 11Furman, ‘‘The Employment Situation in April’’; Center for Budget and Policy Priorities, 

‘‘Chart Book: The Legacy of the Great Recession’’. 12 U.S. Bureau of Labor Statistics, ‘‘Data, Tables and Calculators by Subject: Labor Force Statistics From the Current Population Survey, LNS11300000’’, available at http://data.bls.gov/ 

timeseries/LNS11300000 (last accessed May 2014). 13 U.S. Bureau of Labor Statistics, ‘‘Economic Situation Summary’’. 14The State of Working America, ‘‘The Share of the Unemployed Who Have Been Jobless for 

Six Months or More, 1948–2014’’, available at http://www.stateofworkingamerica.org/charts/ 

long-term-unemployment/ (last accessed April 2014). 15 U.S. Bureau of Labor Statistics, ‘‘Economic Situation Summary’’. 16 Adam Hersh, ‘‘Private Debt, Public Penny-Pinching Holding GDP Back’’, Market Watch, 

April 30, 2014, available at http://www.marketwatch.com/story/private-debt-public-pennypinching-holding-gdp-back-2014-04-30?link=MWlstoryllatestlnews. 17 Ibid. 18 CAP analysis of Bureau of Labor Statistics and National Bureau of Economic Research 

data. See U.S. Bureau of Labor Statistics, ‘‘Labor Force Statistics From the Current Population 

Survey’’, available at http://www.bls.gov/cps (last accessed May 2014); National Bureau of Economic Research, ‘‘U.S. Business Cycle Expansion and Contractions’’, available at http:// 

www.nber.org/cycles/cyclesmain.html (last accessed May 2014). 19Michael Madowitz and Matt Markezich, ‘‘The State of the U.S. Labor Market: Pre-May 

2014 Jobs Release’’, Center for American Progress, May 1, 2014, available at http:// 

www.americanprogress.org/issues/economy/news/2014/05/01/88688/the-state-of-the-u-s-labormarket-2/; The Hamilton Project, ‘‘Closing the Jobs Gap’’, available at http:// 

www.hamiltonproject.org/jobslgap/ (last accessed April 2014). 20 Center for Budget and Policy Priorities, ‘‘Chart Book: The Legacy of the Great Recession’’. 21 Hersh, ‘‘Private Debt, Public Penny-Pinching Holding GDP Back’’. 

unemployment and low labor-force participation continue to define today’s workforce. As of April 2014, the United States had an unemployment rate of 6.3 percent, 

down nearly 4 percentage points from the labor market’s recession peak. 10 While 

there has been steady private-sector job growth over the past 50 months, the pace 

has been too slow to restore us to full employment. 11 The current share of workers 

either working or looking for work falls below the rate at the beginning of the recession—66 percent—and is equal to the lowest participation rate since around 1978. 12

The long-term unemployed have suffered tremendously as we continue to see an 

abnormally high number of Americans who want to work but are unable to find employment. As of April 2014, there were 3.5 million Americans who have been actively searching for a job for 27 weeks or more. 13 At 35.3 percent, the current rate 

of long-term unemployment as a share of the unemployed falls below the peak during the recession but is far and away the highest level on record. 14 Among those 

ages 20 to 24, there is an unemployment rate of 10.6 percent, more than 4 percentage points higher than the national average. 15

According to Adam Hersh of the Center for American Progress, the economy is 

currently growing at around 60 percent of the pace set by the prior three U.S. expansions from as far back as 1982. 16 Since the June 2009 trough, ‘‘the economy has 

grown just 11 percent overall.’’ 17 Of the last six recoveries, the most recent recovery 

ranks behind all but December 2001, with the smallest share of months with job 

growth above 200,000, or 33 percent. 18 Moreover, at the current average rate of job 

growth, analysis done by CAP’s Michael Madowitz using The Hamilton Project’s estimates demonstrates that the U.S. economy will not reach its former level of employment until 2019. 19

Much of the problem has to do with the fact that our economy is suffering from 

a large output gap. Through the first quarter of 2014, demand for goods and services has been more than 4 percent less than what the economy can supply. 20 This 

restrained growth can be largely attributed to both fiscal austerity and stagnant incomes for families across the United States. 21 While businesses continue to see 

strong earnings and capture a major share of the income gains throughout the reVerDate Nov 24 2008 11:14 Dec 19, 2014 Jkt 046629 PO 00000 Frm 00032 Fmt 6621 Sfmt 6621 L:\HEARINGS 2014\05-07 DRIVERS OF JOB CREATION\HEARING\50714.TXT JASON
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22Matthew Phillips, ‘‘Goldman: Corporate Profits Grew Five Times Faster Than Wages in 

2013’’, Bloomberg BusinessWeek, January 24, 2014, available at http://www.businessweek.com/ 

articles/2014-01-24/goldman-2013-corporate-profits-grew-five-times-faster-than-wages; Nelson D. 

Schwartz, ‘‘Recovery in U.S. Is Lifting Profits, but Not Adding Jobs’’, The New York Times, 

March 3, 2014, available at http://www.nytimes.com/2013/03/04/business/economy/corporateprofits-soar-as-worker-income-limps.html?pagewanted=all. 23 Bruce Bartlett, ‘‘It’s the Aggregate Demand, Stupid’’, Economix, August 16, 2011, available 

at http://economix.blogs.nytimes.com/2011/08/16/its-the-aggregate-demand-stupid/ 

?pagewanted=all. 24 Council of Economic Advisers, ‘‘Economic Activity During the Government Shutdown and 

Debt Limit Brinksmanship’’, (Executive Office of the President, 2013), available at http:// 

www.whitehouse.gov/sites/default/files/docs/weeklylindicatorslreportlfinall0.pdf. 25Michael Linden, ‘‘It’s Time To Hit the Reset Button on the Fiscal Debate’’, (Washington: 

Center for American Progress, 2013), available at http://www.americanprogress.org/wp-content/uploads/2013/06/FiscalReset.pdf; U.S. Bureau of Labor Statistics, ‘‘Top Picks’’, available 

at http://data.bls.gov/cgi-bin/surveymost?ce (last accessed May 2014). 26 Congressional Budget Office, ‘‘The Budget and Economic Outlook: 2014 to 2024’’ (2014), 

available at http://www.cbo.gov/publication/45010. 27 Hersh, ‘‘Private Debt, Public Penny-Pinching Holding GDP Back’’; U.S. Bureau of Labor 

Statistics, ‘‘Economic Situation Summary’’. 28 U.S. Bureau of Labor Statistics, ‘‘Table A-14. Unemployed Persons by Industry and Class 

of Worker, not Seasonally Adjusted’’, Press release, May 2, 2014, available at http:// 

www.bls.gov/news.release/empsit.t14.htm. 29 American Society of Civil Engineers, ‘‘2013 Report Card for America’s Infrastructure’’, available at http://www.infrastructurereportcard.org/a/#e/welcome (last accessed May 2014). 

covery, this has not translated into more jobs. 22 This is largely because businesses 

have less of an incentive to invest when consumer demand is weak. 23

This need to improve our economic prospects has not been helped by sequestration, debt ceiling debates, and spending cuts on both the Federal and State levels. 

In particular, according to the Council of Economic Advisers, the most recent Government shutdown and debt limit brinkmanship had a ‘‘substantial negative impact’’ 

on the economy, resulting in a ‘‘0.25 percentage point reduction in the GDP growth 

rate in the fourth quarter and a reduction of about 120,000 private-sector jobs in 

the first 2 weeks of October.’’ 24 Additionally, not only have these austerity policies 

resulted in cuts to investments and services critical to economic growth, but they 

have also led to cutting jobs—including the loss of hundreds of thousands of publicsector jobs since the end of the recession. 25

In short, while we are slowly recovering from the worst economic crisis since the 

Great Depression, in February 2014, the Congressional Budget Office estimated that 

economic growth from the end of 2017 onward will be ‘‘well below the average seen 

over the past several decades’’ and that the unemployment rate will remain above 

6 percent until the end of 2016. 26 Nearly half a decade following the recession, with 

10 million workers unemployed and 3.5 million who have been looking for work for 

6 months or more, 27 the message could not be clearer. We need to take steps to 

accelerate job creation, and we also need to take care that we are creating an economic environment that is producing good, middle-class jobs. 

Policies That Can Promote Job Creation in the Short to Medium Term 

In 2013, the Center for American Progress published an economic growth strategy, ‘‘300 Million Engines of Growth’’, that was centered on the premise that our 

economy will do better when all Americans are able to participate in it at the top 

of their talents. In ‘‘300 Million Engines of Growth’’, we acknowledge the reality that 

if we are going to grow the largest, most dynamic, complex economy the world has 

ever seen, we have to do a lot of things right—with the Government both investing 

in human capital and setting a competitive environment in which our workers and 

businesses can compete at home and abroad. 

Today, I would like to highlight a few policies that would have the benefit of spurring job creation in the shorter term, while at the same contributing to our longerterm competitiveness. 

Infrastructure 

At a time when approximately 800,000 construction workers are out looking for 

work, 28 and when the American Society of Civil Engineers ranks America’s infrastructure with a troubling D+ grade, 29 this is the perfect time for bipartisan consensus on the importance of investing in a new generation of infrastructure—from 

our roads and bridges, to our railways and ports, to our electric grids and wastewater systems. 

30 

30 ‘‘President’s Council on Jobs and Competitiveness, Taking Action, Building Confidence: Five 

Common-Sense Initiatives To Boost Jobs and Competitiveness’’, Interim Report (Executive Office 

of the President, 2011), available at http://files.jobs-council.com/jobscouncil/files/2011/10/ 

JobsCouncillInterimReportlOct11.pdf. 31 Claudia Copeland, Linda Levine, and William J. Mallett, ‘‘The Role of Public Works Infrastructure in Economic Recovery’’, (Washington: Congressional Research Service, 2011), available 

at http://www.fas.org/sgp/crs/misc/R42018.pdf. 

32The White House, ‘‘Fact Sheet: President Obama Lays Out Vision for 21st Century Transportation Infrastructure’’, Press release, February 26, 2014, available at http:// 

www.whitehouse.gov/the-press-office/2014/02/26/fact-sheet-president-obama-lays-out-vision21st-century-transportation-i. 33Federal Highway Administration, ‘‘Productivity and the Highway Network: A Look at the 

Economic Benefits to Industry From Investment in the Highway Network’’, (U.S. Department 

of Transportation, 2012), available at http://www.fhwa.dot.gov/policy/otps/060320b/index.htm. 34 U.S. Bureau of Labor Statistics, ‘‘Economic Situation Summary’’; Sarah Ayres, ‘‘The High 

Cost of Youth Unemployment’’ (Washington: Center for American Progress, 2013), available at 

http://www.americanprogress.org/wp-content/uploads/2013/04/ 

AyresYouthUnemployment1.pdf; U.S. Bureau of Labor Statistics, ‘‘Employment and Unemployment Among Youth Summary’’, Press release, August 20, 2013, available at http:// 

www.bls.gov/news.release/youth.nr0.htm. 35 Ayres, ‘‘The High Cost of Youth Unemployment’’. 36Sarah Ayres, ‘‘America’s Ten Million Unemployed Youth Spell Danger for Future Economic 

Growth’’ (Washington: Center for American Progress, 2013), available at http:// 

www.americanprogress.org/issues/economy/report/2013/06/05/65373/americas-10-million-unemployed-youth-spell-danger-for-future-economic-growth/. 37 Ben Olinsky and Sarah Ayres, ‘‘Training for Success: A Policy To Expand Apprenticeships 

in the United States’’ (Washington: Center for American Progress, 2013), available at http:// 

www.americanprogress.org/wp-content/uploads/2013/11/apprenticeshiplreport.pdf; London 

School of Economics and Political Science and Centre for Economic Performance, ‘‘The State of 

Apprenticeship in 2010’’ (2010), available at http://cep.lse.ac.uk/pubs/download/special/ 

cepsp22.pdf. 38 U.S. Employment and Training Administration, ‘‘Registered Apprenticeship Data and Statistics’’, available at http://www.doleta.gov/OA/datalstatistics.cfm (last accessed May 2014); 

Olinsky and Ayres, ‘‘Training for Success: A Policy To Expand Apprenticeships in the United 

States’’. 

Infrastructure investment is a well-known ‘‘two-fer,’’ meaning it results in job creation in the short term and greater economic competitiveness over the long term. 30

As of 2008, for every $1 billion in infrastructure spending in a given state, around 

9,000 to 15,000 direct and indirect jobs are supported—making infrastructure one 

of the single best investments the Government can make. 31

The President’s recently released surface transportation reauthorization proposal calls for $302 billion in expenditures, which would have a powerful effect on both 

jobs and competitiveness. 32 As valuable as this contribution to the jobs picture 

would be, the contribution to our Nation’s productivity for years to come would be 

enormous as well. After all, the interstate highway system was a massive investment in our Nation’s infrastructure and boosted U.S. annual productivity growth by 

double digits for decades. 33 Yet many of these critical assets are rapidly approaching the ends of their useful lives. America’s workers stand at the ready to lay the 

foundation for the next five decades of prosperity. 

Apprenticeships 

The latest unemployment statistics highlight that too many of America’s young 

people are either unemployed or underemployed. 34 Unemployment does not just 

hurt these would-be workers now; it can also depress their earnings for years into 

the future due to forgone work experience and missed opportunities to develop 

skills. 35 The fact that the number of unemployed and underemployed young Americans is greater than the entire population of New York City has extremely damaging implications for our economic prospects as a Nation. 36

One immediate opportunity to address part of this problem is through dramatically expanding apprenticeships, a structured form of paid worker training that 

combines on-the-job learning and classroom instruction. Apprenticeships have been 

shown to boost workers’ earnings and raise sponsoring companies’ productivity levels, which is why many other countries rely on them as a central tool to develop 

a highly skilled, competitive workforce. 37 But even though, according to the U.S. 

Department of Labor’s Employment and Training Administration, there are currently more than 375,000 registered apprentices in the United States, the training 

model is largely unfamiliar to Americans and considerably less widely used than in 

countries such as Germany and the United Kingdom. 38

Expanding the U.S. apprenticeship system both in number of participants and 

available occupations would strengthen employment outcomes for young Americans 

by creating pathways for young workers to good-paying, middle-class jobs. ApprenVerDate Nov 24 2008 11:14 Dec 19, 2014 Jkt 046629 PO 00000 Frm 00034 Fmt 6621 Sfmt 6621 L:\HEARINGS 2014\05-07 DRIVERS OF JOB CREATION\HEARING\50714.TXT JASON
31 

39Debbie Reed and others, ‘‘An Effectiveness Assessment and Cost-Benefit Analysis of Registered Apprenticeship in 10 States’’ (Oakland, CA: Mathematica Policy Research, 2012), available at http://wdr.doleta.gov/research/FullTextlDocuments/ETAOPl2012l10.pdf; Sarah 

Ayres, ‘‘5 Reasons Expanding Apprenticeships Will Benefit Millennials’’, Center for American 

Progress, December 2, 2013, available at http://www.americanprogress.org/issues/economy/ 

news/2013/12/02/79872/5-reasons-expanding-apprenticeships-will-benefit-millennials/. 40 Ayres, ‘‘5 Reasons Expanding Apprenticeships Will Benefit Millennials’’. 41The White House, ‘‘Fact Sheet: American Job Training Investments: Skills and Jobs To 

Build a Stronger Middle Class’’, Press release, April 16, 2014, available at http:// 

www.whitehouse.gov/the-press-office/2014/04/16/fact-sheet-american-job-training-investmentsskills-and-jobs-build-stron; Nia Hamm, ‘‘Bill Aims To Spur Job Growth for the Unemployed’’, 

CNBC, April 15, 2014, available at http://www.cnbc.com/id/101581979. 42 Jennifer Erickson, ‘‘Top 10 U.S. Government Investments in 20th Century American Competitiveness: Why Federal Funding in the 21st Century Is Equally Critical to U.S. Science and 

Economic Competitiveness’’ (Washington: Center for American Progress, 2012), available at 

http://www.americanprogress.org/issues/economy/report/2012/01/06/10930/top-10-u-s-government-investments-in-20th-century-american-competitiveness/. 43 Ibid. 44 Ibid. 45 Ibid. 46 James J. Heckman and Dimitriy V. Masterov, ‘‘The Productivity Argument for Investing 

in Young Children’’. Working Paper 5 (Committee on Economic Development, 2004); James J. 

Heckman, ‘‘Schools, Skills, And Synapses’’, Economic Inquiry 46(3) (2008): 289–324; James 

Heckman, Seong H. Moon, Rodrigo Pinto, Peter A. Savelyev, and Adam Yavitz, ‘‘The Rate of 

the Return to the High Scope Perry Preschool Program’’, Journal of Public Economics 94 (2010): 

p. 114–128. 

tices get a job today and higher wages for a lifetime. Researchers have found that, 

including nonwage benefits, workers who complete an apprenticeship make an average of $300,000 more than comparable job seekers in their lifetimes. 39 Importantly, 

the wage premium in many cases comes with little or no educational debt. 40

Given these benefits, we should welcome the President’s recent announcement of 

$100 million in grants to support new apprenticeships, and Congress should pass 

the bipartisan Leveraging and Energizing America’s Apprenticeship Programs, or 

LEAP, Act, which would provide businesses with a tax credit for each apprentice 

they hire, expanding these highly successful private-sector-led training programs. 41

Policies That Can Promote Job Creation in the Longer Term 

While investing in infrastructure and apprentices can help create jobs in the near 

term, there is much more to be done to drive job creation in the longer term. 

Investments in the middle class following World War II helped build the most 

prosperous economy in the world. Congress made those investments in core areas 

of U.S. competitiveness—our people, our infrastructure, and our innovation. 

The G.I. Bill helped almost 8 million American veterans go to college or get training and was seen as so successful that it was repeated for Korean and Vietnam veterans and further expanded after September 11, 2001. 42 From 1944 to 1956, we invested the equivalent of more than $100 billion in 2011 dollars, and our return on 

that investment was the engine of middle-class growth that powered the American 

economy following the Great Depression and World War II. 43

President Dwight D. Eisenhower embarked on one of the most ambitious Government spending programs America has ever seen in the form of the interstate highway system. In 2011 dollars, we invested $468 billion—across multiple administrations headed by both Republicans and Democrats—to connect the country with more 

than 42,000 center-line miles of road, in what President Eisenhower referred to as 

a ‘‘mighty network’’ critical to U.S. competitiveness, safety, and defense. 44

Taking one example of our research and development investment following World War II, in 2011 dollars, we invested $150 billion in the Apollo space program. At 

the height of its efforts, it employed 400,000 Americans and worked with 20,000 

partnering institutions. This investment led to massive technological advancement 

and technology transfer in the private sector, leading to more than 1,500 successful 

spinoffs in areas from heart monitors to solar panels. 45

The point of these three examples is that we know what works and leads to big 

returns on public investment: investments in our people and our innovative environment. 

The question now is this: Are we prepared to invest in ourselves once again? 

When it comes to human capital, will we invest in our future workers by ensuring 

all our children have access to high-quality preschool education, where economist 

James Heckman has shown we can earn a high return on our educational investment? 46 Or—in a clear-eyed realization of the economic and entrepreneurial value 

of giving legal status to aspiring Americans—will we ensure there is a pathway to 

citizenship for the 11 million undocumented immigrants currently living in the 

32 

47 Robert Lynch and Patrick Oakford, ‘‘The Economic Effects of Granting Legal Status and 

Citizenship to Undocumented Immigrants’’ (Washington: Center for American Progress, 2013), 

available at http://www.americanprogress.org/wp-content/uploads/2013/03/ 

EconomicEffectsCitizenship-6.pdf; Jennifer Erickson and Michael Ettlinger, ‘‘300 Million Engines 

of Growth: A Middle-Out Plan for Jobs, Business, and a Growing Economy’’ (Washington: Center 

for American Progress, 2013), available at http://www.americanprogress.org/issues/economy/ 

report/2013/06/13/66204/300-million-engines-of-growth/. 48Michael J. Boskin and Lawrence J. Lau, ‘‘Generalized Solow-Neutral Technical Progress 

and Postwar Economic Growth’’, Working Paper 8023 (National Bureau of Economic Research, 

2000), available at http://www.nber.org/papers/w8023; Robert M. Solow, ‘‘Technical Change 

and the Aggregate Production Function’’, Review of Economics and Statistics 39(3) (1957):312– 

320, available at http://www9.georgetown.edu/faculty/mh5/class/econ489/Solow-Growth-Accounting.pdf. 49Office of Management and Budget, ‘‘Historical Tables’’, available at http:// 

www.whitehouse.gov/omb/budget/Historicals (last accessed May 2014). 50Linden, ‘‘It’s Time To Hit the Reset Button on the Fiscal Debate’’. 51 Council of Economic Advisers, The Economic Impact of the American Recovery and Reinvestment Act Five Years Later (Executive Office of the President, 2014), available at http:// 

www.whitehouse.gov/sites/default/files/docs/cealarralreport.pdf. 

United States, knowing that the extra jobs and money that their status would create would lead to an average annual increase of 121,000 jobs and a cumulative 10- 

year boost to GDP of $832 billion? 47 The Senate has already spoken on this, passing 

a bipartisan bill that is still waiting for a vote in the House. 

And when it comes to improving our economic environment, since we know that 

advances in science and technology account for roughly half of the growth in the 

U.S. economy since World War II, 48 are we prepared to boost investment in general 

science, space, and technology funding, which was reduced in real terms by about 

12 percent from 2010 to 2013? 49

In fact, according to Michael Linden, the period from 2010 to 2013 saw ‘‘the largest three-year reduction in Federal spending since the demobilization at the end of 

the Korean War.’’ 50 Since we all have an interest in responsible public finance, we 

must recognize that responsible public finance includes responsible public investment. Cutting investments at a time when the global economy is getting ever more 

competitive is short sighted in the extreme and risks the very innovation economy 

that our workers and our businesses—aided by smart Government investment— 

have worked so diligently to build. 

Additionally, while we need to invest in our human capital and our economic environment, we also must take great care not to repeat the mistakes of the past that 

will decimate employment. Millions of Americans are still reeling from the after-effects of the financial crisis and Great Recession, including long-term unemployment 

and lost household wealth. In fact, the Council of Economic Advisers calculated that 

during this period, Americans lost more than $13 trillion in wealth. 51 So as a start, 

we must see through the landmark reforms from the Dodd-Frank Wall Street Reform and Consumer Protection Act to ensure that the era of ‘‘too big to fail’’ has 

truly passed and empower regulators with the tools they need to do the job required 

for the American people. 

Conclusion 

We know how the economy works: Securing America’s middle class is the path 

to strengthening U.S. economic growth now and for the long term. If we are going 

to have a vibrant economy producing good-paying jobs, we need that economy to be 

fueled by a strong and growing middle class that can supply the human capital, entrepreneurship, and stable demand to drive our economy. 

Some of the policies discussed today can have an immediate effect in driving job 

creation, such as investing in infrastructure and expanding apprenticeships. Others, 

such as investing in our next generation of workers who are just starting their educational journeys and funding research and development, will take decades to bear 

fruit. But the sooner we acknowledge that smart Government policies that support 

a strong and growing middle class are key to our economic success, the sooner we 

will see more Americans in good-paying, middle-class jobs. 

33 

1 Home Performance Resource Center: Manufacturing Shares of Common Energy Remodeling 

Products. 

PREPARED STATEMENT OF DEREK SMITH 

CHIEF EXECUTIVE OFFICER, CLEAN ENERGY WORKS OREGON

MAY 7, 2014 

Mr. Chair, Members of the Committee, my name is Derek Smith. I am CEO of 

Clean Energy Works, based in Portland, Oregon. Thank you for the opportunity to 

speak with you this afternoon; and thank you, Senator Merkley, for your leadership 

on clean energy and economic development. 

Clean Energy Works is a nonprofit, public–private partnership. Our mission is to 

create jobs and reduce energy waste through the facilitation of home energy retrofits. We coordinate and deploy public, private, and utility dollars to scale up the residential energy efficiency sector. 

We were founded four years ago as a City of Portland pilot project seeded with 

Recovery Act dollars. I am here to report that this smart Federal investment is 

proving that residential energy efficiency can create quality jobs and unlock private 

capital to grow a vibrant marketplace. 

To date, our statistics include: 

• 12,000 sign-ups 

• 3,700 homes upgraded in rural, suburban and urban communities 

• 30 percent average energy savings per home 

• More than $1.5 million put back into the pocketbooks of Americans instead of 

being spent on energy waste 

As for jobs, we know through our work that, for every 10 homes upgraded, one 

job gets created. To date, we’ve enabled: 

• 1,300 workers receiving paychecks 

• 400 new-hires in the hard-hit construction industry 

• $21/hour average wages across multiple trades, from weatherization to plumbing to electrical to HVAC 

• 56 percent of work hours performed by women and people of color 

• 36 veterans working on projects 

• $65 million in economic development 

• And counting . . . 

Before we began our work, this market was 200 homes per year and workers were 

paid piece-rate wages averaging around $9/hour. We are now lifting people out of 

poverty and into career pathway professions. 

How do we generate these numbers? It all comes down to making it easy for citizens to upgrade their homes for energy efficiency. The way it works for a homeowner is: 

1. They sign up at our Web site 

2. We arrange for an assessment of their home and pair them with a vetted contractor 

3. A scope of work is drafted and agreed upon by the contractor and homeowner 

4. We arrange financing from a local lender 

5. We provide quality control and customer service throughout the project 

Currently, more than 100 small- to medium-sized contracting firms are growing 

their businesses in the program. And multiple private lenders are providing unsubsidized financing. These lenders include several credit unions, a regional bank and 

a community development financial institution. Loan products include secured, unsecured, home equity and ‘‘on-bill,’’ meaning customers can pay back their loans on 

their utility bills. So private investment is happening, initially spurred on by public 

investment. 

As you know, retrofitting inefficient homes puts energy savings back into the wallets of American families and communities. A coordinated effort to retrofit America’s 

housing stock would create hundreds of thousands of U.S. jobs in some of the hardest hit industries, including construction and manufacturing. These are primarily 

small business jobs that cannot be outsourced, using materials that are on average 

90 percent made in the U.S.A. 1 In Oregon alone, we estimate there are 600,000 

34 

2http://www.jchs.harvard.edu/sites/jchs.harvard.edu/files/harvardljchslremodelinglreportl2013.pdf 3http://www.imt.org/uploads/resources/files/IMTlUNClHomeEEMortgageRisksfinal.pdf 

homes in need of weatherization, an $8 billion opportunity that could create 60,000 

jobs. 

Plus, energy efficiency is unique in that it creates its own cash flow—less money 

spent on energy means more money to purchase groceries and save for college. Simply put, saving energy pays for itself. 

So I’d like to conclude by highlighting a few policy issues for your consideration. 

National Policy Challenge—Utility Coordination 

Utility dollars are regulated at a State level and are exclusively focused on energy 

savings, blind to economic opportunity, driven by lowest cost, and so they inadvertently foster cheap wages and minimal career advancement. Even though there may 

not be direct Federal jurisdiction, I point this out as a national policy issue because, 

when you send public dollars into the energy efficiency sector—a proven smart investment that creates jobs and unlocks private capital—public utility commission 

oversight formulas consider this leverage an unwelcome challenge. The result is the 

potential pullback of utility investment. It is our experience that continued growth 

in energy efficiency can be optimized when public, private and ratepayer dollars are 

effectively coordinated. 

National Policy Opportunities—Real Estate Valuation 

The Sensible Accounting to Value Energy (SAVE) Act, S. 1106, was introduced by 

Senators Bennet (D-Colo.) and Isakson (R-Ga.) in June of last year. This legislation 

would improve the accuracy of mortgage underwriting used by Federal mortgage 

agencies by including energy efficiency as a factor in determining the value and affordability of a home. 

The SAVE Act is a prudent addition to Federal underwriting guidelines as it incorporates the second largest cost of home ownership—energy costs, which exceed 

both taxes and insurance as a monthly expense. It is not a mandatory addition to 

such policies, but only comes into play if the consumer is buying a new energy efficient home or seeking to improve the efficiency of an older home. In fact, consumers 

in older homes have been significantly allocated a larger part of their remodeling 

expenditures to energy efficiency according to the Harvard Joint Center. 2

The inclusion of net energy savings in the debt-to-income calculation is not a liberalization, but a long overdue prudent addition to correct a ‘‘blindspot’’ in underwriting. A car loan or credit card debt is included in the debt burden, but not the 

energy cost, which may be higher. Although the SAVE Act does not call for a mandatory inclusion, it allows for the recognition of cost-effective savings from rated 

properties to be included. For example, if the monthly additional mortgage cost to 

obtain a new or improved home is $50 a month, but the monthly savings are $95, 

the residual $45 only can be recognized as a net energy savings. I would argue that 

it is not a coincidence that the Veterans Administration, the only federally insured 

entity that includes a proxy for energy costs, had the best mortgage performance 

over the recent housing crisis cycle. Although anecdotal, many housing counselors 

have reported that, in performing troubled homeowner counseling, energy costs were 

a large and relatively fixed component of monthly expenses that were harder to adjust relative to other expenses such as cutting down discretionary spending or selling a second car. 

The appraisal feature of the bill has been supported by the Appraisal Institute 

and the Congressionally chartered Appraisal Foundation as consistent with generally recognized valuation methods and techniques. 

It is also important to note how mortgages for such homes actually have actually 

performed over time. The University of North Carolina studied the performance of 

energy efficient homes versus a matched sample for the period from 2001 to 2012. 3

It found that the energy efficient homes foreclosed on average 32 percent less than 

their similar neighbors. Furthermore, they stayed in their homes on average 25 percent greater period of time possibly indicating greater satisfaction due to comfort 

and lower operating costs. 

Over 50 national organizations have signed on as supporters of the SAVE Act. 

What is of interest is the diversity of the group, including leading organizations representing business (NAM and the Chamber), housing (NAHB, NAR, and LBA), industry (Dow, Johns-Manville, and BASF), as well as energy efficiency-focused NGOs 

(ACEEE, NRDC, and ASE) and Efficiency First, a home performance business trade 

association of which Clean Energy Works is proud to be a member. They all recognize the changes happening in the housing industry and agree on the benefits of 

35 

prudent underwriting support as well as savings to consumers and strengthening 

of the economy and job formation in our communities. 

National Policy Opportunities—Financing 

While I have noted here today how valuable home energy efficiency may be, despite its value, it is severely under-utilized. There remain significant market barriers that prevent this vital resource—energy efficiency—from being tapped more effectively. Homeowners are being asked to make these investments not only because 

we want them to save money on their utility bills, but because this reduces costs 

across the energy system as a whole, and also to achieve broader goals such as energy independence, pollution reduction, job creation. However, we are not properly 

valuing these very real public and resource benefits energy efficiency provides. Instead, we are asking homeowners to pay for the full cost of these improvements, 

often up front and out of pocket. 

One of the key shifts to begin accounting for the multiple benefits of energy efficiency is to move towards accounting for energy efficiency as a resource, the demand 

reduction equivalent of supply-side energy production. Reducing demand on the grid 

through energy efficiency is akin to building power plants, only cheaper, 100 percent 

domestic and completely clean. 

We know how to finance power plants. Due to the structure, protections and oversight in place, power plants supply a stable and predictable amount of energy to 

an established and reliable market. Utilities can raise capital to make investments 

in projects to increasing the Nation’s energy supply, however, we lack the same mature capital sources and markets for energy efficiency, even though it is widely understood to be the most cost effective resource for meeting our energy needs. 

We need to begin to treat residential energy savings as distributed demand-side 

power plants that will ultimately, at least in part, be paid for based on their ability 

to deliver an energy saving resource to the grid. To accomplish this, we must more 

rigorously measure and account for the performance of energy efficiency improvements. 

Historically, energy efficiency incentives have largely been targeted at specific 

technologies and individual improvements. Transitioning these incentives to a performance-based paradigm that links incentives to actual savings allows for technology and business model neutrality. Rather than attempting to maintain an upto-date list of equipment specification or picking winning technologies or special interests, offering incentives based on savings at the meter can free up the tax code 

from keeping pace with an ever-changing industry. Most importantly, it creates a 

system that is flexible and rewards innovation. 

Senators Cardin, Feinstein, and Schatz introduced S. 2189, the Energy Efficiency 

Tax Incentives Act last month. This legislation includes the first performance based 

energy efficiency tax incentive—25E in the tax code. This tax incentive would provide between $2,000–$5,000 to homeowners based on their energy savings. And, 

public dollars would be targeted toward public goods, energy savings. This approach 

would let the market determine the technology put in the home. Tax dollars would 

be investing in those minipower plant savings and the multipublic benefits those 

savings provide. 

Thank you very much for your support and consideration. 

PREPARED STATEMENT OF EMIL H. FRANKEL 

VISITING SCHOLAR, BIPARTISAN POLICY CENTER

MAY 7, 2014 

Thank you, Chairman Merkley, Ranking Member Heller, and Members of this 

Senate Banking, Housing, and Urban Affairs Subcommittee on Economic Policy for 

the opportunity to address on the important issue of the economic returns and job 

growth benefits of investment in infrastructure. This has been a matter that has 

dominated our work on transportation and infrastructure policy at the Bipartisan 

Policy Center (BPC), where I am currently a Visiting Scholar. I directed BPC’s National Transportation Policy Project (NTPP) that issued a series of reports and white 

papers between 2009 and 2012, which, among other matters, addressed the interrelationship between transportation and infrastructure investment and benefits to 

the broader economy. 

Most relevant, in January, 2011, NTPP issued a white paper, entitled ‘‘Strengthening Connections Between Transportation Investments and Economic Growth’’, coauthored by two members of NTPP, Douglas Holtz-Eakin, a distinguished economist 

and former Director of the Congressional Budget Office (CBO), and Martin Wachs, 

one of America’s leading scholars of transportation and urban planning during a 

36 

long career at the University of California, Berkeley, UCLA, and RAND Corporation. I will refer to this white paper during my testimony this morning. 

Increasingly, over the past 25 years, as a State and Federal transportation official, a consultant, teacher, and policy contributor on transportation and infrastructure issues, I have come to appreciate the role that these investments play in building economic growth and prosperity. Throughout American history, even before the 

birth of the Republic, investments in roads and canals (the so-called ‘‘internal improvements’’ that Henry Clay and Abraham Lincoln and their Whig colleagues espoused), railroads and ports, highways and aviation have characterized public policy 

and have influenced—perhaps, more than any other single thing—where cities are 

located and whether they grow or decline. From Albert Gallatin, Thomas Jefferson’s 

Treasury Secretary, to Dwight Eisenhower, America’s leaders have spoken of the 

economic and political significance of wise infrastructure investments. In the words 

of Gallatin, ‘‘Good roads and canals will shorten distances, facilitate commercial and 

personal intercourse, and unite, by a still more intimate community of interests, the 

most remote quarters of the United States. No other single operation, within the 

power of Government, can more effectually tend to strengthen and perpetuate that 

Union which secures external independence, domestic peace, and internal liberty.’’ 

In my own teaching I have made extensive use of a book by a distinguished economist, Peter Bernstein, Wedding of the Waters. It’s about the construction of the Erie 

Canal in the early years of the 19th Century. Its development was, of course, a marvel of surveying, engineering, and construction at the time, but what Bernstein is 

most interested in is the extraordinary impact that this infrastructure investment 

had on the economy of the State, the region, and the Nation. The Erie Canal connected the newly settled areas of the Mid-West and Great Lakes regions to the original States, and allowed the agricultural products and natural resources to reach 

Eastern and world markets, and for industrial products to reach what was then 

America’s frontier. New cities were born, like Buffalo and Syracuse, and older cities 

took on new and prosperous economic functions, like Albany and, of course, New 

York City. The Erie Canal reinforced New York City’s preeminent position, as 

America’s center of finance, commerce, and international trade, a position that it 

has held for over 200 years. In a word, the Erie Canal created what we have known 

as the American economy. 

Similarly, as William Cronan, distinguished University of Wisconsin historian, 

demonstrated in his monumental Nature’s Metropolis, the coming of the railroads 

to Chicago fundamentally changed the economies and the natural and built environments of that great city and of the Plains and other western regions of America, 

by making it possible for the products of America’s ‘‘Great West’’ to reach national 

and regional markets. 

In a March 2012 report of President Obama’s Treasury Department with the 

Council of Economic Advisors (CEA), it was noted that the United States has a rich 

history of investing in infrastructure and reaping the long-term benefits. Those benefits include both the short-term effects of stimulating the maintenance and creation 

of construction and construction-related jobs and long-term economic growth. It 

seems that every surface transportation authorization bill, at least since ISTEA in 

1991 (and probably before), has been justified on the basis of stimulating construction employment, the so-called ‘‘jobs’ multiplier’’ effect. Elected and appointed officials are fond of talking about 20,000 or 30,000 or 50,000 new jobs’ being created 

for every $1 billion of investment, as justification for legislation. I have done so, myself. 

While infrastructure investments play an important role, in stimulating construction jobs, quantifying the so-called multiplier effect is, perhaps, more difficult than 

it sometime appears. Certainly, infrastructure projects can be important, in stimulating new construction and construction-related positions, particularly, in times of 

severe unemployment in construction, as was the case during the ‘‘Great Recession,’’ 

which America has recently endured. However, there are substantial uncertainties, 

in predicting such job growth, and therefore it should not be the sole basis for justifying public investment in infrastructure. 

As Holtz-Eakin and Wachs noted in the BPC white paper, to which I have referred, ‘‘Spending on transportation is often justified on the basis of jobs impacts, 

but estimated multiplier effects carry substantial uncertainty. Generally, they are 

not purely data-driven; rather they rely on judgments and assumptions, may not 

take into account aspects of the structure or timing of an investment that would 

have an impact on its actual multiplier effects, and may miss qualities of the specific economic environment in which an investment is being made. These uncertain 

estimates about how many jobs will be created by a given increment of transportation spending too often obscure meaningful comparative assessment of different 

investment opportunities.’’ 

37 

As the BPC white paper further noted, ‘‘Short-term job creation, while vitally important, must be viewed within the context provided by a long-term view. Over the 

long-term, higher productivity . . . is the key to higher labor earnings and improved 

standards of living.’’ It is the long-term economic benefits, in terms of productivity, 

efficiency, access to markets, and labor force flexibility, which should be the goals 

and purposes of public investment in transportation and other infrastructure 

projects and programs. The March 2012 Treasury–CEA report noted that investments in infrastructure allow goods and services to be transported more quickly and 

at lower costs, resulting in both lower prices for consumers and increased profitability for firms. This report also concluded that infrastructure investment created 

middle-class jobs. It reached this conclusion, based on an analysis that 80 percent 

of the jobs created by investing in infrastructure would be in the construction, manufacturing, and retail sectors and that, by distribution of wages in these three sectors, 90 percent of these jobs would be defined as middle-class jobs, that is, between 

the 25th and 75th percentiles in the national distribution of wages. 

However, selecting and supporting those infrastructure investments that promise 

the greatest short- and long-term economic benefits in a time of persistent budget 

deficits and stagnant public spending is a difficult challenge to public policy leaders. 

Public investment capital is constrained, not least by a political environment that 

often views ‘‘investment,’’ as just another category of spending, and by a political 

process that seems incapable of establishing sustainable revenue streams for such 

investments. 

Surface transportation funding at the Federal level has been stagnant for several 

years, and the motor fuels taxes, on which such funding depends, have not been increased in over 20 years. As BPC’s transportation policy project noted in its June 

2011 report, ‘‘The reality is that Federal transportation spending is likely to be 

under enormous pressure for some time to come, despite compelling evidence that 

we have been falling consistently short of making the infrastructure investments 

needed to sustain an efficient, safe, environmentally sustainable, and well-functioning transportation network.’’ The same may be said about all other areas and 

categories of infrastructure. 

The priority, then, needs to be on making ‘‘wise’’ infrastructure investments, that 

is, those that promise the greatest economic benefits, in terms of increased productivity, efficiency, and job creation. Unfortunately, although there are exceptions, 

America does not have in place an analytical, planning, and capital programming 

framework that allows such investment decision-making to occur. We need to be 

able to develop comprehensive strategic capital programs, in which investments are 

synergistic and prioritized, and, pursuant to which, scarce resources are directed to 

the most promising projects. 

For many years, Edward Gramlich, a distinguished economist and former Federal 

Reserve Governor, argued that the greatest returns could be found with investments 

in existing assets. This view was consistent with the analytical approach of a report 

several years ago to the United Kingdom’s Treasury and Department for Transport 

(DfT) by Sir Rod Eddington, former CEO of British Airways (the Eddington Report). 

The Eddington Report concluded that, generally, the most positive benefits, in relation to costs occurred with incremental improvements to existing facilities and networks, rather than from large ‘‘build-it-and-they-will-come’’ projects. 

Most important, and relevant, about the Eddington Report, however, was its application of benefit-cost analyses to competing projects and its reliance on economic 

factors, in making choices about the investment of constrained public resources. For 

example, it found that, given the tremendously important role of the London metropolitan region to the national economy and of the movement of goods and services 

to, from, and through a national system deeply dependent upon global trade and finance, investments in the assets and networks critical to these elements of the British economy were, by far, the most beneficial. 

Similarly, the decision about an enormous public infrastructure investment— 

about $20 billion (U.S.) for the development and construction of an entirely new subway line across metropolitan London—in a time of severe austerity was justified on 

the basis of a strong business case that completion of the new Crossrail line would 

serve to enhance mobility and access in London and benefit the agglomeration of 

financial and related services, on which the British economy has come to depend for 

economic growth and prosperity. 

Of course, neither the Eddington Report nor the business case for Crossrail has 

perfect application to the decisions that America’s public leaders have to make about 

infrastructure investments, but the analytical and decision-making processes that 

have been used in those cases do seem relevant to the United States. We need to 

be able to make better and ‘‘wiser’’ infrastructure decisions in the context of scarce 

public investment resources, stagnant Federal infrastructure funding, and the unVerDate Nov 24 2008 11:14 Dec 19, 2014 Jkt 046629 PO 00000 Frm 00041 Fmt 6621 Sfmt 6621 L:\HEARINGS 2014\05-07 DRIVERS OF JOB CREATION\HEARING\50714.TXT JASON
38 

willingness of Congress to provide for sustainable revenue sources to support such 

investments. 

Of course, these circumstances stimulate other significant Federal policy changes, 

in order to respond to the need for greater infrastructure investment. For one thing, 

as Federal infrastructure funding stagnates, the investment burden is falling more 

heavily on States and localities. Limited Federal funds have to be used more effectively to leverage greater public and private investment at those levels. My BPC colleague, Aaron Klein (a distinguished alumnus of this Committee staff) and I argued 

in an OP/ED a few months ago that the Federal role in infrastructure was, increasingly, moving from funding to financing. This calls for the expansion of existing Federal loan and credit enhancement vehicles, like TIFIA, as well as consideration of 

new ones, such as infrastructure banks and financing authorities. But expanded 

Federal financing requires the establishment of appropriate revenue streams at the 

State and local level to support Federal credit and provide returns to private investors. To that end, Federal barriers to State and local innovations to establish such 

sustainable revenue sources should be eliminated, and such State and local innovations should be incentivized by Federal policy. 

None of these policy initiatives, however, remove the need to make better and 

wiser choices. Public capital resources at all levels will remain scarce for the indefinite future, so investments must be made in those infrastructure projects and programs that promise the greatest economic returns, both in the short-term and the 

long-term. Analytical and decision-making tools are available to us, in order to select the right infrastructure investments. It is critical that America’s public officials 

use those tools on a consistent basis. 

PREPARED STATEMENT OF ROBERT DIETZ 

VICE PRESIDENT FOR TAX AND MARKET ANALYSIS, NATIONAL ASSOCIATION OF HOME

BUILDERS

MAY 7, 2014 

On behalf of the 140,000 members of the National Association of Home Builders 

(NAHB), I appreciate the opportunity to testify today. My name is Robert Dietz, and 

I am an economist and Vice President for Tax and Market Analysis at NAHB. My 

area of focus includes housing market and home building industry analysis, as well 

as tax and other policy issues. I received a Ph.D. in economics from The Ohio State 

University in 2003. 

NAHB is a Washington, DC-based trade association whose broad mission is to enhance the climate for housing, home ownership and the residential building industry. We represent builders and developers who construct housing ranging from single-family for-sale homes to affordable rental apartments and remodelers. About 

one-third of NAHB’s members are home builders and/or remodelers. The others are 

associates working in closely related specialties such as sales and marketing, housing finance, and manufacturing and supplying building materials. 

The State of Employment in the Residential Construction Sector 

After experiencing significant job losses during the Great Recession, the residential construction sector is adding jobs to the national economy as housing construction recovers. According to Census Bureau data, in 2005 total housing starts 

reached an historic high of 2.068 million: 1.716 million single-family and 352,000 

multifamily homes. Leading into the housing crisis and the Great Recession, the 

pace of home construction declined significantly. Construction activity declined from 

2006 to 2009, reaching an annual total of only 554,000 total housing starts in that 

year: 445,000 single-family and 109,000 multifamily. 

Since that time, and particularly over the course of 2012 and 2013, home construction recovered as housing demand strengthened due to overall job growth and 

household balance sheet repair. For 2013, housing starts totaled 925,000: 618,000 

single-family and 307,000 multifamily units. 

39 

1 ‘‘Construction Job Openings Cool at the Start of 2014’’. NAHB Economics and Housing Policy blog post: http://eyeonhousing.org/2014/04/08/construction-job-openings-cool-at-the-start-of2014/ 2 ABLS Data and NAHB Calculations’’. April BLS Employment Report. May 2, 2014. 

Driven by declines in home equity and the volume of existing home sales, remodeling activity also declined during the recession—although not as much—and has 

also begun to expand. In 2006, home improvement related spending peaked at 

$144.9 billion. As the pace of existing home sales declined during the recession, remodeling felt the impact, falling to $111.6 billion in 2010. For 2013, the sector expanded off cycle lows, reaching $134 billion for the year. 

With activity declines in all three subsectors of the residential construction industry (single-family, multifamily, and remodeling), significant jobs losses were incurred. Data from the Bureau of Labor Statistics reveals that at peak employment 

in April 2006, the residential construction sector employed 3.45 million people 

(1.022 million builders and 2.428 specialty contractors). 1 From April 2006 until January 2011, the industry lost 1.466 million jobs. 

Since that time, the expansion in home building and remodeling has added jobs 

back to the sector. Over the last two and half years, 274,000 jobs have been added 

by home builders and remodelers. Over the course of the last year alone, 108,000 

jobs were added. 2 More are expected with continued gains in construction activity. 

Currently the industry employs 659,000 individuals in the builder category and 

1.598 million as residential specialty contractors, for an industry total of 2.257 million. 

40 

NAHB is forecasting that single-family construction activity will expand by 22 

percent in 2014 to a total of 760,000 starts. The multifamily sector should see modest growth of 6 percent to a total of 326,000 starts. This represents a slightly cooling 

from the substantial growth witnessed during the 2011–2013 period. Finally, NAHB 

is forecasting that remodeling related activity will grow 3.1 percent during 2014, 

which represents a slowing of growth as existing home sales subside. 

The industry still has room to grow. At its most fundamental level, the demand 

for new homes is determined by the growth of population and households, as well 

as the need to replace older housing stock or to accommodate changes in the location of regional economic activity. Thus, while the forecasted 2014 numbers for 

home construction represent substantial improvements over the lows set after the 

recession, these totals are still off from the potential or normal levels of activity. 

As the following chart illustrates, the Nation can expect population growth and 

rising household formation in the years ahead. The yellow bar in the graph highlights key ages for household formation (25–35). We are currently entering a period 

in which the size of the population entering these key years is on the rise, with 

roughly 4 million currently aged 35 but 4.6 million aged 22. These ‘‘echo boomers’’ 

will increase demand for both rental and owner-occupied housing in the years 

ahead. 

41 

3 ‘‘Impact of Home Building and Remodeling on the U.S. Economy’’. NAHB Economics and 

Housing Policy. http://www.nahb.org/generic.aspx?sectionID=734&genericContentID=227858&channelID=311 

NAHB estimates that total housing construction should over the next few years 

return to a level just under 1.7 million combined single-family and multifamily 

starts per year. The forecasted first quarter 2014 level of single-family construction 

represents only 45 percent of this normal or expected level of activity. By the end 

of 2015, NAHB is forecasting that single-family activity will have improved to approximately 93 percent of this benchmark. 

Virtuous Circle of Housing and Jobs 

Housing and jobs form a virtuous circle in which employment growth for a local 

economy increases the demand for home construction, which in turn creates additional jobs. NAHB has developed a model that uses Government data to estimate 

the complete interactive economic benefits that arise with residential construction. 3

The model employs the input-output accounts from the Bureau of Economic Analysis 

to track the impacts from home construction on other sectors of the economy. These 

additional impacts are traced and summed to estimate the aggregate impacts on 

wages, business income, jobs, and taxes. 

The 2014 estimates for this model find the following: 

• Building an average single-family home produces 2.97 jobs (full-time equivalents) o $110,957 in Federal, State, and local taxes 

• $162,080 in wages and salaries 

• $118,354 in business income 

Of the 2.97 jobs per home, 1.76 are in construction, with the remainder in other 

sectors including manufacturing, wholesale and retail trades and other industries. 

• Building an average rental apartment produces 1.13 jobs (full-time equivalents) 

• $42,383 in Federal, State, and local taxes 

• $60,877 in wages and salaries 

• $46,838 in business income 

Of the 1.13 jobs per multifamily unit, 0.68 are in construction, with the remainder 

in other sectors including manufacturing, wholesale and retail trades and other industries. 

42 

4 ‘‘Jobs in Home Building and Remodeling’’. NAHB Economics and Housing Policy. http:// 

eyeonhousing.org/2014/02/11/jobs-in-home-building-and-remodeling/ 

• $100,000 in remodeling expenditures produces 0.89 jobs (full-time equivalents) 

• $29,779 in Federal, State, and local taxes 

• $48,212 in wages and salaries 

• $35,190 in business income 

Of the 0.89 jobs per multifamily unit, 0.55 are in construction, with the remainder 

in other sectors including manufacturing, wholesale and retail trades and other industries. 

Additional data from the Bureau of Labor Statistics Occupational Employment 

Statistics (OES) provide details concerning the types of jobs created by home builders. 4 The OES survey defines employment as the number of workers who are classified as full- or part-time employees. The following profile examines the Residential 

Building Construction industry group, which includes builders of for-sale and owner/ 

contractor built single-family and multifamily housing, as well as residential remodelers. 

According to the 2012 OES, management jobs constituted approximately 9 percent 

of jobs in the residential construction industry, for a total of more than 48,000 positions. Office and administrative support made up the second largest category, which 

at just under 80,000 jobs represented 14 percent of sector employment. Sales staff 

and business/finance roles each made up about 4 percent of home building business 

jobs, each contributing approximately 24,000 jobs. 

Other jobs in home building, generally representing about 6 percent in combination, include architects, lawyers, designers, building/grounds maintenance staff, security guards, drivers, and IT staff. 

Not surprisingly, the largest share of home building/remodeling employment is 

concentrated in construction and extraction jobs. For 2012, more than 363,000 jobs 

were in such fields. The following chart provides a breakdown of these jobs. 

43 

5 ‘‘A Nation of Builders’’. NAHB Economics and Housing Policy. http://eyeonhousing.org/ 

2013/06/03/a-nation-of-builders/ 

Carpenters make up almost half of construction/extraction jobs (47 percent), for 

a total of more than 171,000 jobs. The OES defines carpenters as workers who construct, erect, install, or repair structures made of wood. It also includes workers who 

install cabinets, drywall, siding, and insulation. Approximately 30 percent of carpenters nationwide are employed by the residential building construction sector. 

Rounding out the construction segment of industry employment are construction 

laborers, worksite supervisors, brickmasons, stonemasons, carpet/tile installers, cement masons, equipment operators, drywall installers, electricians, glaziers, insulation workers, painters, plumbers, plasters, rebar workers, roofers, and sheet metal 

workers. 

Besides involving a variety of occupations, this base of employment has wide geographic scope. The following map uses 2011 data from the U.S. Census to chart by 

county builder and remodeler employment across the Nation. 5

44 

6 ‘‘Wages in Home Building and Remodeling’’. NAHB Economics and Housing Policy. http:// 

eyeonhousing.org/2014/02/12/wages-in-home-building-and-remodeling/ 

Additional data from the 2012 OES provides details concerning the wages paid 

by these occupations. 6 The following charts present median wages by occupations 

for workers in home building and remodeling. Annual wages are calculated, by the 

BLS, as the hourly wage paid on a 2,800 hour annual basis. Wages are measured 

on a gross pay basis, but certain bonuses and employer paid benefits are excluded. 

Occupations with median wages in excess of the U.S. median represent approximately 80 percent of total employees. 

45 

The second chart breaks out shares of the large element of the industry—construction and extraction occupations, which constitute 64 percent of industry employment. The percentages on this second chart are percentages of this 64 percent 

only. 

Taken together, these data demonstrate that as the residential construction sector 

continues its post-Great Recession recovery, hundreds of thousands of jobs will be 

46 

7 ‘‘First Quarter 2014L Housing Share of the Economy at 15.5 percent’’. NAHB Economics and 

Housing Policy. http://eyeonhousing.org/2014/04/30/first-quarter-2014-housing-share-of-theeconomy-at-15-5/ 

created within the construction sector and within other sectors of the economy. 

These jobs will, among other economic impacts, also boost demand for rental and 

owner-occupied housing. For example, given NAHB’s forecast for significant singlefamily construction growth, approximately 420,000 jobs will be created for 2014 in 

the construction and related business sectors due to residential construction growth. 

Housing’s Contribution to GDP and National Wealth 

From a macroeconomic perspective, housing plays a key role in our Nation’s economy. As of the first quarter of 2014, housing’s share of gross domestic product (GDP) 

was 15.5 percent, with home building yielding 3 percentage points of that total. 7

Housing-related activities contribute to GDP in two basic ways. 

The first is through residential fixed investment (RFI). RFI is effectively the 

measure of the home building and remodeling contribution to GDP. It includes construction of new single-family and multifamily structures, residential remodeling, 

production of manufactured homes and brokers’ fees. For the fourth quarter, RFI 

was 3 percent of the economy. 

While the first quarter of 2014 was the fourth strongest level of RFI after the 

Great Recession ($482 billion annualized pace), the slowing of the rate of growth for 

home building was a drag on quarterly GDP growth. This was the second consecutive quarter of drag after 12 straight quarters of boosting economic growth. Nonetheless, the trend in recent quarters indicates that RFI is growing faster than the 

economy as a whole. For example, over the last 2 years, the quarterly annualized 

measure of GDP has grown about 3.7 percent, while RFI is up 15.5 percent. 

The second impact of housing on GDP is the measure of housing services, which 

includes gross rents (including utilities) paid by renters, and owners’ imputed rent 

(an estimate of how much it would cost to rent owner-occupied units) and utility 

payments. The inclusion of owners’ imputed rent is necessary from a national income accounting approach because without this measure increases in home ownership would result in declines for GDP. For the fourth quarter, housing services was 

12.5 percent of the economy. 

Historically, RFI has averaged roughly 5 percent of GDP while housing services 

have averaged between 12 percent and 13 percent, for a combined 17 percent to 18 

percent of GDP. These data illustrate once again the room housing has to grow, increasing national income and creating jobs. 

47 

8 ‘‘Homeownership Remains a Key Component of Household Wealth’’. NAHB Economics and 

Housing Policy. http://www.nahb.org/generic.aspx?sectionID=734&genericContentID=215073&channelID=311 9 R.D. Dietz and D.R. Haurin, ‘‘The Social and Private Micro-Level Consequences of Homeownership’’, Journal of Urban Economics 54 (2003) 401–450. 10 C.J. Mayer, K.V. Simons, ‘‘Reverse Mortgages and the Liquidity of Housing Wealth’’, 

AREUEA Journal 22 (1994) 235–255. 

Home ownership also represents the most important investment and source of 

savings that most middle class households will undertake. 8 Nationally, the primary 

residence represents the largest asset category on the balance sheets of households. 

At $20.7 trillion, the primary residence accounted for almost one-third, 30 percent, 

of all assets held by households in 2010. The primary residence represented 62 percent of the median homeowner’s total assets and 42 percent of the median home 

owner’s wealth. It is also a widely held asset. A greater share of households (67 percent) owned a primary residence than held a retirement account (50 percent) or 

stocks and bonds (16 percent). 

Equity in residential property tends to be a particularly important component of 

wealth for lower income, older households. For age 75+ households with incomes 

under $35,000, the median share of net worth held as equity in a primary residence 

is 60 percent. Higher income households over age 75 have higher net worth and 

more equity in a home in absolute terms, but equity in a primary residence accounts 

for a smaller share of total net worth. The median residential equity share of net 

worth for households age 75 or older with total income between $35,000 and $60,000 

was 47 percent and 36 percent for older households with income between $60,000 

and $100,000. The median residential equity share of net worth for the highest-income, older households was 30 percent. 

Housing’s Social and Community Benefits 

The impact of housing is not limited to savings and other economic outcomes. Be 

it rental or owner-occupied housing, the residential capital stock provides a basic 

need for shelter. There is a time to rent and a time to own a home, with the right 

decision determined by factors such as age, income, family size, expected length of 

stay in a given area, and other factors. 

Hence, ensuring the availability of safe and decent rental housing is an important 

social policy objective. The Low-Income Housing Tax Credit (LIHTC), the Nation’s 

only affordable housing production program, serves in a critical role in this regard. 

Since its inception, the LIHTC has produced and financed more than 2 million affordable apartments. As LIHTC properties must generally remain affordable for 30 

years, they provide long-term rent stability for low-income households around the 

country. But the demand for affordable housing is acute and exceeds the availability 

of financing through the LIHTC program. 

For those ready to meet the financial obligations of owning a home, home ownership offers a wide range of benefits to individuals and households. 9 These include 

increased wealth accumulation, improved labor market outcomes, better mental and 

physical health, increased financial and physical health for seniors, reduced rates 

of divorce, and improved school performance and development of children. 

These beneficial financial and social outcomes are due to the stability offered by 

home ownership, as well as the incentives created by the process and responsibilities of becoming and remaining a homeowner. 

An important motivating factor in the pursuit of home ownership is the investment opportunity it offers for many families. As noted earlier, despite recent price 

declines, equity in a home constitutes a substantial proportion of a typical American 

family’s wealth. According to the 2010 Federal Reserve Survey of Consumer Finances (SCF), the median family net worth of a homeowner is $174,500; for renters, 

it was $5,100. 

Home ownership also provides advantages for seniors. A significant proportion of 

a household’s wealth is in the form of equity of owner-occupied housing, and this 

wealth provides significant advantages in retirement. Mayer and Simons (1994) indicate that equity in the home and the use of a reverse mortgage could increase liquidity for senior households by as much as 200 percent. 10

These data illustrate the importance of housing wealth and suggest caution with 

respect to policies that would reduce these wealth holdings, based on decisions made 

over a lifetime, via direct policy changes or indirect changes. 

Overall, economists, sociologists and other social scientists have found significant, 

positive home ownership-related impacts on a large set of outcomes associated with 

48 

11Two comprehensive literature reviews detailing the impacts of home ownership are: W. M. 

Rohe, G. McCarthy, S. Van Zandt, ‘‘The Social Benefits and Costs of Home Ownership: A Critical Assessment of the Research’’, Research Institute for Housing America, Working Paper No. 

00-01 (2000); R. Dietz and D. Haurin, ‘‘The Social and Private Microlevel Consequences of Home 

Ownership’’, Journal of Urban Economics 54 (2003) 401–450. 12 ‘‘Smaller Banks Are the Largest Source of AD&C Lending’’. NAHB Economics and Housing 

Policy. http://eyeonhousing.org/2014/04/21/smaller-banks-are-the-largest-source-of-adc-lending/ 13 ‘‘Stock of AD&C Loans up More Than 7 Percent During 2013’’. NAHB Economics and Housing Policy. http://eyeonhousing.org/2014/02/27/stock-of-adc-loans-up-more-than-7-during2013/ 14 ‘‘AD&C Lending Conditions Ease Slightly at the End of 2013’’. NAHB Economics and Housing Policy. http://eyeonhousing.org/2014/02/24/adc-lending-conditions-ease-slightly-at-the-endof-2013/ 15 ‘‘Producer Price Index Up for March’’. Economics and Housing Policy. http:// 

eyeonhousing.org/2014/04/11/producer-price-index-up-for-march/ 

households and communities. 11 For these and other positive impacts, home ownership has and should continue to remain an important national policy objective. 

Industry Headwinds 

While the housing sector has considerable room to grow given population and 

household growth, the ongoing recovery has seen month-to-month volatility. In fact, 

recent data (particularly for existing home sales, but also for housing starts) indicate that the unseasonably cold winter sapped some of the momentum that the 

housing market carried into 2013. Beyond seasonal factors, other headwinds will 

challenge the recovery in home construction. These factors include access to building 

lots, rising building materials, access to builder credit, and labor shortages for some 

tasks in some markets. 

As noted earlier, housing demand is recovering in most markets. However, to 

meet that demand, home builders must have access to developed, ready-to-build lots. 

The supply of lots in many markets is low, and for smaller builders this constraint 

is the primary reason for not being able to build homes. Partially, the lack of lots 

is connected to another headwind: lack of credit. Home builders and developers 

must have access to credit or equity to build homes or develop lots. Such lending, 

which typically comes from community bank, 12 is known as acquisition, development and construction (AD&C) financing. 

AD&C lending was severely curtailed during the housing crisis. 13 At the low 

point for lending, the stock of loans was down approximately 80 percent. While lending conditions have begun to ease (according to NAHB industry surveys 14 and FDIC 

indicates that the stock of outstanding loans rose by approximately 7 percent over 

the course of 2013, a lending gap persists that is filled, when possible, by nontraditional sources of financing. Nonetheless, lending for smaller builders and developers 

represents a significant bottleneck for the ongoing recovery in home construction. 

Rising building material prices are both a challenge and a sign of the recovery 

and growth in residential construction. 15 Gypsum prices have risen by 10 percent 

to 20 percent at the beginning of the last three years. And softwood lumber and oriented strandboard prices have risen significantly over the last three years, with occasional spikes in prices when demand exceeds manufacturing capacity. Some easing in building material prices has been seen when new factories and material 

sources come online, but the rising cost of construction is a factor that keeps some 

building projects from proceeding. 

49 

16 ‘‘Construction Jobs Openings Cool at the Start of 2014’’. NAHB Economics and Housing Policy. http://eyeonhousing.org/2014/04/08/construction-job-openings-cool-at-the-start-of-2014/ 

Another significant headwind is local labor shortages, particularly for some skilled 

labor positions. 16 NAHB industry surveys report that securing workers for projects 

for specific time periods has become increasingly difficult as the pace of home construction accelerated. Data from the Bureau of Labor Statistics Job Openings and 

Labor Turnover Survey (JOLTS) provides an illustration of the degree to which the 

rate of unfilled job openings in the construction sector is rising. 

As of February 2014, the 3-month moving average of the construction job openings 

rate stood at 2 percent, slightly lower than the 2.33 percent in December but a higher rate of unfilled jobs than any post-recession period before October 2013. Currently there are 273,000 unfilled jobs in the construction industry. The rate of open 

jobs in the construction industry has risen significantly since the spring of 2012. 

50 

17 ‘‘How Government Regulation Affects the Price of a New Home’’. NAHB Economics and 

Housing Policy. http://www.nahb.org/generic.aspx?sectionID=734&genericContentID=161065&channelID=311 

Finally, while housing demand should improve, given the sources of pent up demand and population growth, uncertainties with respect to the tax and finance rules 

that govern homebuying and home building act as additional business challenges to 

builders. These uncertainties include the future of housing tax rules in the Internal 

Revenue Code, including the mortgage interest deduction and the Low-Income 

Housing Tax Credit, as well as the future of the housing finance system and the 

secondary mortgage market. At the local level and Federal levels, regulatory burdens also increase the cost of building and deter job creation. 

Policy Recommendations 

The home building industry can be a key engine of job creation that this Nation 

needs. That said, certain policy decisions will help the industry play its traditional 

role as a job creator as the economy moves out of periods of weakness. 

First, mindful of the job destroying potential of onerous regulations, ensuring that 

undue regulatory burdens do not hinder economic growth will ensure the sector can 

continue to create jobs. NAHB industry surveys and analysis shows the degree to 

which these regulations increase the cost of a home. 17 These estimates show that, 

on average, regulations imposed by Government at all levels account for 25 percent 

of the final price of a new single-family home built for sale. Nearly two-thirds of 

this—16.4 percent of the final house price—is due to a higher price for a finished 

lot resulting from regulations imposed during the lot’s development. A little over 

one-third—8.6 percent of the house price—is the result of costs incurred by the 

builder after purchasing the finished lot. 

Fostering skill training and ensuring young workers are interested in the construction trades is another policy that will increase the growth of the industry, 

while raising wages and employment of younger workers. Multiple approaches can 

be taken in this regard, including job centers and protecting the role of the community college system in our Nation. The BLS JOLTS data cited earlier indicates that 

there are currently many unfilled construction sector jobs waiting to be claimed by 

individuals with the right training. 

At the Federal level, Congress should maintain its important and historic support 

of home ownership and affordable housing. Protecting policies like the mortgage inVerDate Nov 24 2008 11:14 Dec 19, 2014 Jkt 046629 PO 00000 Frm 00054 Fmt 6621 Sfmt 6621 L:\HEARINGS 2014\05-07 DRIVERS OF JOB CREATION\HEARING\50714.TXT JASON 50714011.eps
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18http://eyeonhousing.org/2013/10/23/housing-related-tax-provisions-expiring-at-the-end-of2013-2/ 

terest deduction and the LIHTC are critical to ensuring the growth of the middle 

class and access to housing. The future of the housing finance system, including enabling a liquid secondary mortgage market that serves the entire country, is also 

key to how people buy homes in the future. Passing comprehensive housing finance 

reform is a part of this process. Providing certainty with respect to these housingrelated policies is an important goal. 

In the short-run, one element of certainty can be obtained by passing a tax extenders bill that would extend tax rules such as the minimum 9 percent credit rate 

for the LIHTC and the continued existence of residential energy efficient tax credits 

(45L for new construction and 25C for retrofitting existing homes). 18

Summary 

Residential construction plays a key role in creating jobs and generating economic 

growth, particularly as the economy emerges from recessions. After a multiyear 

transition period, housing is once again playing that role and the industry is ready 

to get back to work. Housing creates jobs, and job growth for builders and other sectors of the economy in turn foster demand for rental and owner-occupied housing. 

Given the underlying demand for new homes in the county, the industry is poised 

to build on the 274,000 jobs created over the last 21⁄2 years with hundreds of thousands more as housing starts return to more normal levels of production. 

PREPARED STATEMENT OF R. THOMAS BUFFENBARGER 

INTERNATIONAL PRESIDENT, INTERNATIONAL ASSOCIATION OF MACHINISTS AND

AEROSPACE WORKERS

MAY 7, 2014 

Thank you, Chairman Merkley, Ranking Member Heller, and Members of this 

Committee for the opportunity to testify before you today on the vital importance 

of manufacturing to the creation and preservation of American jobs. My name is 

Tom Buffenbarger and I serve as International President of the International Association of Machinists and Aerospace Workers, also known as the IAM. Our members 

work in a variety of manufacturing industries including aerospace, electronics, defense, shipbuilding, transportation, and woodworking. The IAM is a broadly diversified manufacturing union and the largest aerospace union in North America. We 

strongly believe that manufacturing is critical to our national economic recovery. 

Manufacturing is responsible for the good jobs that our Nation needs. It also generates the innovation and new technology which our Nation depends upon to ensure 

a healthy, robust, and sustainable economy in the future. 

According to the U.S. Bureau of Labor Statistics, the manufacturing sector contributes $1.6 trillion in value to our economy, or about 9 percent of GDP. A recent 

study by the Congressional Research Service notes that manufacturers have been 

responsible for approximately 70 percent of all research and development conducted 

by businesses in the United States. 

Manufacturing jobs are good jobs. Workers in the manufacturing sector enjoy an 

8.9 percent compensation premium over other working Americans and are more 

likely to have employer paid health care and other benefits. Since the start of the 

21st Century education levels for manufacturing workers have improved; nearly 30 

percent have at least a college degree and the percentage with less than a high 

school diploma as shrunk to 10 percent. However, what has made manufacturing 

a source of middle class jobs has been the traditionally high rate of unionization 

within the sector. The Center for American Progress notes the disturbing correlation 

between the decline of union density and the share of the Nation’s income going to 

the middle 60 percent of households, which has fallen from 52.3 percent to 45.7 percent since peaking in the late 1960s. If this trend continues then manufacturing 

work will not be the ladder to the middle class as it historically has been. 

The effect of the manufacturing sector and the jobs that it produces can be found 

in the sector’s multiplier effect. This can be seen in two ways; the Manufacturing 

Institute has found that every dollar of manufactured products supports $1.33 in 

output from other sectors, a larger multiplier than any other economic sector. In 

other words, manufacturing creates the wealth that drives much of our economy. 

Moreover, manufacturing jobs support additional jobs, both direct and indirectly 

related to manufacturing, throughout the economy and the multiplier ratios from 

manufacturing vary from a low of 1:3 to high of 1:16. The difficulty in coming up 

52 

with a precise ratio derives from the changing nature of manufacturing jobs and 

what is counted as a manufacturing job. In the past, many manufacturing enterprises were vertically integrated operations that included a variety of support functions, such as, shipping and transportation, as well as professional and business 

services like accounting, legal, and consulting. If any of these functions are directly 

employed by a manufacturer, then they are counted as manufacturing jobs, otherwise the jobs are considered indirectly related to manufacturing. Other examples of 

indirect employment impacted by manufacturing activity include jobs in restaurants, retail, as well as local and State government. 

According to last week’s employment report, manufacturing employment currently 

stands at 12.1 million jobs, nearly 9 percent of U.S. payrolls. Significantly, even 

with the addition of 650,000 manufacturing jobs since the bottom of the Great Recession, the U.S. has still lost over five million manufacturing jobs since the start 

of this century. While a variety of factors, including technological changes and lean 

manufacturing practices, have reduced overall manufacturing employment, the lack 

of a comprehensive manufacturing policy that is directly related to jobs, our flawed 

trade policies and a ballooning trade imbalance, $475 billion in 2013, have also contributed to this decline. 

This year marks the 20th anniversary of NAFTA, which increased our trade deficit with Canada and Mexico by $150 billion resulting in a loss of an estimated one 

million U.S. jobs. For our members at companies like Maytag and Freightliner who 

saw their work and jobs moved to Mexico, the harsh reality of this model of trade 

is not a theoretical discussion. 

An even bigger killer of U.S. manufacturing jobs has been the implementation of 

Permanent Normal Trade Relations (PNTR) with China. When China PNTR was 

passed in 2000, the U.S. exported three times as many manufactured goods as 

China, but within a decade China surpassed the U.S. in exports and became the 

world’s leading manufacturer and exporter. By 2012 our share of global manufacturing activity had declined to 17 percent from 30 percent just a decade earlier even 

as the value of our exports had more than doubled. Now, two-thirds of our global 

trade deficit is with China, a rapidly growing country that engages in a variety of 

unfair trade practices—illegal subsidies, forced technology transfer, currency manipulation, and an appalling lack of labor rights. The Economic Policy Institute estimates that over the last decade our trade imbalance just with China has cost the 

U.S. nearly three million jobs and put downward pressure on U.S. wages. And now, 

just two years after the passage of the U.S.–Korea FTA we have seen our exports 

to Korea drop and our trade deficit with that country grow with a loss of an estimated 60,000 American jobs, mostly in manufacturing. 

Successful countries recognize the importance of a strong manufacturing sector 

and the true nature of global competition. These countries know that there is no 

such thing as a ‘‘free market,’’ and provide strong support for critical wealth and 

job creating sectors like manufacturing. 

The IAM has long called for the development of a national manufacturing strategy 

as our global competitors have done. This is not about picking winners and losers, 

but, rather, creating the foundation for future prosperity. We applaud the President 

for taking some important first steps to make this happen. The creation of the Office 

of Manufacturing Policy reporting to the National Economic Council, as well as the 

Advanced Manufacturing Partnership (AMP), which includes representatives from 

labor, industry, academia, and the Federal Government, has put a new focus on 

manufacturing at the highest levels of our Government. 

We look for the Advanced Manufacturing Partnership to develop a national manufacturing strategy that links Government policies and investment to actual job creation. This could be accomplished by requiring employment impact statements as 

part of the decision making process for Government procurement contracts, grants, 

and awards. Simply stated, contracting agencies and policy makers should know 

how many good domestic jobs will be created and maintained by a contractor or 

grantee. 

Our trade policies must be reformed to include enforceable labor rights and environmental protections. This is particularly important as the U.S. negotiates the 

Trans-Pacific Partnership (TPP) with countries like Vietnam and Brunei that lack 

free and independent labor unions. Also, enforcement action must be taken to end 

currency manipulation by our global competitors. 

Other important steps to facilitate the growth of manufacturing jobs include 

strengthening and standardizing the measure of ‘‘Made in the U.S.’’ and Buy American requirements for Government procurement contracts. In some cases, the domestic content requirement is as low as 51 percent and it is not always clear that agencies limit their calculation of domestic content to direct factors of production. 

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The American Society of Civil Engineers estimates that the U.S. has an infrastructure deficit of over $3 trillion. Infrastructure investments make our Nation 

more efficient and are crucial to our ability to compete globally. Strong Buy American requirements coupled with investments in our crumbling infrastructure would 

spur manufacturing growth. We have already seen this in mass transit as foreign 

rail manufacturers have set up production in the U.S. to meet domestic content requirements. This has spurred the creation of a domestic supply chain to meet the 

needs of these transplanted manufacturers. Ending the misguided policy of sequestration will enable the rebuilding of our infrastructure and protect our defense industrial base, a critical component of U.S. manufacturing and an ongoing source of 

innovation. 

One Government initiative, the Export-Import Bank, stands out as a success. The 

Export-Import Bank provides critical financing for the export of American made 

goods and services. Last year, the Bank provided over $37 billion worth of export 

financing that supported over 200,000 American jobs, mostly in manufacturing, and 

returned over $1 billion to the U.S. Treasury. All of our important global competitors provide similar financing and Congress must reauthorize this important program this year. 

Manufacturing plays a critical role in our economy. The sector is an engine of innovation and a source of middle class jobs. We must not, however, take the sector 

for granted. America needs to think strategically about how we prepare our workforce, what investments we make to remain globally competitive, and how we trade 

with other Nations. For too long our focus has been on meeting the needs of U.S.- 

based multinational corporations at the expense of working Americans. This culture 

must change. Only then will we see a rebirth of American manufacturing—a rebirth 

that is essential for our national and economic security, and the future of America’s 

hard-working men and women and their families and communities. 

I would be happy to answer any questions that the Committee may have. 

Policies To Promote U.S. Manufacturing Jobs 

1. Develop a comprehensive manufacturing strategy that reviews all Federal incentives to corporations to outsource manufacturing (tax policy, currency, 

trade, and investment policies). 

2. Require that all contracting agencies adopt and implement employment impact 

statements. Policy makers and Government procurement officers should know 

how many domestic jobs will be created and maintained by each contractor/ 

grantee who submits a proposal. Contractors should be accountable for making 

sure that they met their job estimates. If they do, then this should also be a 

factor in future contracts. If they do not, then they should be barred from future Government contracts. 

3. All trade and investment deals must undergo a careful analysis to determine 

the jobs impact they will have on specific U.S. industries and communities before negotiations are commenced. In this vein the IAM continues to demand 

that all past trade and investment deals be reviewed to determine their specific 

job/community impact. Include enforceable labor and environmental protections 

in all trade agreements. 

4. End currency manipulation by our global competitors. 

5. Reauthorize the Export-Import Bank for 5 years and increase its lending cap. 

6. Strengthen Buy American requirements and more limits on Buy American 

waivers, which are currently too vague and broad. Make certain that Made in 

the U.S.A. actually means Made in the U.S.A. Review all domestic content requirements to make certain that these requirements are directly related to jobs 

and do not contain intangibles not directly related to production costs. 

7. Create a manufacturing development bank with below market loans for establishing manufacturing plants in this country that are directly related to creating American jobs. 

8. End sequestration and make investments in our crumbling infrastructure.